Reckitt Benckiser has downgraded growth expectations for the year in a blow to the group’s ongoing turnaround as unexpected manufacturing issues hurt its North American sales in the third quarter.
Organic sales growth in the three months to September of 3.3% for the core Reckitt business was below analyst expectations. Group revenues hit £3.2bn in the quarter, with gains coming from price rises as volumes declined 0.7%.
It was mixed picture across geographies as Europe returned to like-for-like growth of 0.8% thanks to NPD and strong growth for ‘powerbrands’ such as Gaviscon, Vanish and Veet. Finish, Durex and Harpic were also back in growth in Europe in the quarter.
Reckitt struggled in North America as temporary manufacturing capacity constraints limited the group’s ability to meet strong Lysol consumer demand as it upgraded manufacturing capabilities. Sales in the region fell 1.3% as a result. Growth of 8% in emerging markets helped offset weakness elsewhere.
Following the disruption in North America and a category slowdown in China for vitamins and supplements, Reckitt guided its sales growth expectations for the year down to 3.5%-4.5%. It previously stood at 4%-5%.
However, CEO Kris Licht said there was positive demand for cold & flu remedies following lower incidences of the illnesses in Q3.
“We are driving good underlying performance despite a challenging consumer environment,” he said.
“We enter Q4 with good momentum, continue to execute our strategy and invest behind our brands and capabilities.”
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