Wednesday, April 24, 2024 7:32am
Weak profits in the nutrition division weighed on Reckitt Benckiser’s first-quarter results.
The Durex and Nurofen maker reported a 1.5% rise in group-wide like-for-like revenue in the three months to the end of March. Overall volume decreased 0.5% as price increases offset volume declines. Group revenues reached £3.7bn.
Underlying sales in the Nutrition division fell by 9.9% to £591m, more than offsetting a 7.1% increase in Hygiene and a 1% increase in Health.
Investors have been keeping a close eye on the group in recent months due to concerns about its infant formula business.
Back in March, a jury awarded an Illinois woman $60 million after a court agreed that the company’s Enfamil drug, sold through its subsidiary Mead Johnson, caused the premature death of a child. The court awarded damages of approximately £4,822.
“We continue to believe that the claims made by the plaintiffs’ attorneys in this case are not supported by scientific or medical experts,” Mead Johnson said last month.
Mr Reckitt said: “The Group faces contingent liabilities in respect of product liability claims brought against Mead Johnson in connection with necrotizing enterocolitis.” [a serious condition that can affect newborn babies]Trial on either of these cases is currently scheduled to begin on September 30, 2024 in St. Louis, Missouri. ”
Reckitt acquired Mead Johnson in June 2017.
While this could be a costly issue for the company, management said the nutrition division’s problems during the quarter were due to competitors recovering from supply shortages. Volume decreased by 9.4%. The company said the decline was due to “a rebase from temporary market share gains due to competitor supply issues over the past few years.”
CEO Chris Licht said: After a period of price-led growth, we are now returning to a more balanced contribution of price, mix and volume.
“In the quarter, we saw volume growth across many of our power brands, including Lysol, Dettol, Durex and Finish, as well as our non-seasonal OTC portfolio. Additionally, we continue to see strong carryover pricing and consumer demand for our products. We continue to benefit from the trade-up of premium innovations.
He added: “Net revenue performance for the quarter is consistent with our expectations.” The hygiene sector has brought widespread growth. Health-related segments had strong growth across many brands, but were down due to tough comparisons for our cold and flu OTC brands. As expected, nutrition continues to normalize in the US and we maintain our value market share leadership. ”
