Reckitt Benckiser issues second profit warning of the year amid slump in flu medicine sales
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Household goods producer Reckitt Benckiser has slashed its sales forecast for the second time this year, blaming a drought in retail orders of seasonal products as it adapts to life under a new chief executive.
Shares fell five per cent in early trading as the firm, which makes Durex condoms and Lysol disinfectant, said it now expects full-year like-for-like sales growth to be between flat and just two per cent up.
Read more: Reckitt Benckiser cuts full-year guidance after ‘slow start to the year’
This is down from its previous target of between two per cent and three per cent.
Reported sales rose 5.3 per cent in the third quarter to £3.29bn, missing analyst forecasts of £3.32bn.
Reckitt said customers had been cautious in buying its Mucinex and Delsym cold and flu products in the US ahead of flu season.
It also cited a drop in demand for its Enfamil baby food products in China.
The company also said it expects a modest decline in adjusted operating margins for the year as it pours more money into its brands.
Reckitt had previously expected margins to be at the same level as last year.
The quarterly report is the first for new Chief Executive Laxman Narsimhan who in September took over from long-time CEO Rakesh Kapoor.
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“Reckitt Benckiser’s performance in Q3 was disappointing,” Narsimhan, the former Pepsico executive said in a statement.
“I am prioritising execution and operational performance as a matter of urgency.”