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Reckitt Takes Hit From Stumbling Scholl And Price Pressure

Published on Apr 20 2018 10:19 AM in A-Brands tagged: Trending Posts / FMCG / Reckitt Benckiser / Scholl

Reckitt Takes Hit From Stumbling Scholl And Price Pressure

Reckitt Benckiser lagged other consumer good makers in the first quarter as further falls in Scholl footcare and lower prices hit the British company's sales growth.

Bernstein analysts said Reckitt's like-for-like sales growth was "bottom of class" of the five European food and packaged goods companies that have reported quarterly sales so far, and it shares fell 5 percent on Friday to their lowest level since August 2015.

The Battle Continues

Nestle, Procter & Gamble and Unilever also saw very little first-quarter pricing growth as packaged goods makers face pressure from retailers fighting off drug store chains and Amazon.com.

Reckitt, which makes Durex condoms, Lysol disinfectant and Mucinex cold medicine said like-for-like sales rose 2 percent in the first quarter, below analysts' average estimate of 2.6 percent, according to a company-supplied consensus.

Volume was up 3 percent, implying that overall pricing had a negative 1 percent impact, which was worse than what Nestle and Unilever experienced.

"This year's earlier Easter doesn't seem to have helped Q1's performance – or if it has, the underlying picture is pretty grim, in our view," analysts at RBC Capital markets said.

Weak Health

Reckitt's health-related products, which make up 62 percent of the business, saw like-for-like sales up just 1 percent, held back by a 2 percentage point drag from Scholl, which has struggled for two years in the wake of a failed product launch.

"We are addressing our performance in Scholl through acceleration of our pipeline, penetration improvement programmes and streamlining our range," Reckitt said in a statement.

Sales in the smaller home and hygiene business rose 4 percent.

Reported sales were 3.11 billion pounds ($4.37 billion), just shy of the 3.12 billion in analysts' consensus.

The company said it still expects 2018 revenue up 13 to 14 percent, with like-for-like sales up 2 to 3 percent. That would be an improvement from flat sales growth in 2017, due to a spate of issues from a product failure to a cyber attack.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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