Weak cold and flu season hits sales at Reckitt Benckiser

(Sharecast News) - Shares in Reckitt Benckiser Group fell on Wednesday, after a weak cold and flu season weighed on first-quarter trading. The owner of Durex, Dettol, Vanish, Nurofen and Strepsils, among many others, posted a 1.3% rise in core like-for-like sales in the first three months of the year. Within that, revenues in Europe fell 4.2% and by 0.9% in North America. But emerging markets fared better, with a 7.6% spike in sales.

Group sales - which include the Mead Johnson baby formula business, which is slated for disposal - were up 0.6%.

Kris Licht, chief executive, said trading had been affected by "very low seasonal incidence, weak categories in Europe and geopolitical disruption". Once seasonal over the counter drugs were stripped out, sales rose 3.1%, he noted.

As at 0900 BST, the blue chip was down 5% at 4,670p.

However, looking forward and the blue chip maintained full-year guidance for like-for-like core sales growth of between 4% and 5%.

"While acknowledging the current uncertainty arising from the war in the Middle East," Reckitt said, "through 2026 we expect to benefit from the rest of the cold and flu season as well as the launch of superior innovations across our categories.

"We are driving continued momentum across our North American non-seasonal portfolio and are taking actions to improve our execution in Europe."

However, it also flagged that should oil prices remain elevated, costs would rise, though they would largely be offset by flexibility in the supply chain, its hedging strategy and pricing.

The planned disposal of Mead Johnson Reckitt is part of wider plans by Reckitt to refocus on its core brands. It sold a majority stake in its Essential Home business in December to private equity firm Advent International for $4.8bn.

Richard Hunter, head of markets at Interactive Investor, said: "The sale of Mead Johnson remains high on the to-do list, but with the Essential Homes disposal complete, core Reckitt is edging towards its strategic objective of concentrating on its most established and highest margin power brands.

"Growth remains on track, despite some headwinds.

"While stocks such as Reckitt will never be seen as racy or high fashion, they are nonetheless rather more solid and dependable. These defensive characteristics can come into their own in market environments such as these."