British household goods maker Reckitt Benckiser has reported lower than expected second-quarter sales, hurt by a slowdown in demand for infant formula in the United States and China, and cut its full-year revenue target.
The Durex condom and Lysol disinfectant maker said it now expects full-year like-for-like sales growth to be between 2% and 3%, down from its previous target of 3% to 4%.
The company blamed a slowdown in demand for its infant formula products in China, its biggest market, for flat like-for-like sales growth in the second quarter. This missed the 1.9% growth expected by analysts, according to estimates supplied by the company.
Net revenue rose 2% to £3.08 billion against analysts' average estimate of £3.13 billion.
“Our like for like performance in H1 was +1%, somewhat below our expectations. Hygiene Home delivered another quarter of consistent top line growth but progress in Health in Q2 was disappointing," commented Rakesh Kapoor, Reckit Benckiser's chief executive.
"We have now been operating in RB 2.0 for 18 months and have made some important achievements. Hygiene Home has been unleashed and is delivering consistently. But on our journey to be a world leader in consumer health, we have work to do to deliver consistent financial performance."
The group said that plans to split the group into two structurally independent units remains 'on track' for the mid-part of next year.
As well as Infant Nutrition, which was flat in the second quarter, the group's OTC medicines businesss was up 1% at constant exchange rates, while its Other Health division, which includes Dettol, Durex, Scholl, Veet and Clearasil, among others, was down 3%.
Its Health division was down 1%, while Hygiene Home rose by 3%.
"With the slow start to the year, and the turnaround in Health still work in progress, we are revising our 2019 net revenue target to +2-3% LFL growth (previously +3-4%). Our target of maintaining adjusted operating margins remains unchanged," said Kapoor.