Reckitt has encountered revenue declines, yet remains hopeful with strategic changes planned for 2025.
- The company noted a 0.5% growth in like-for-like revenue for Q3, but overall revenue dropped by 4%.
- Key sectors showed mixed results; hygiene and health grew, while nutrition faced significant declines.
- Supply disruptions due to natural disasters impacted the nutrition sector’s performance.
- New operational structure and leadership reshuffles are set to steer the company forward.
Reckitt has acknowledged experiencing financial setbacks recently, registering a minor 0.5% increase in like-for-like net revenue for the third quarter. However, the broader fiscal metrics reveal a more concerning picture with a 4% overall decline in net revenue for the same quarter, compounded by a 3.8% decrease year-to-date up to September. Despite these figures, the consumer goods conglomerate is confident in achieving its full-year targets, buoyed by anticipated robust net revenue growth across all divisions in the final quarter.
The performance across Reckitt’s sectors was varied. The hygiene division expanded by 2.1% and health by 3.2% during the third quarter. In stark contrast, the nutrition sector suffered a steep decline of 17.3% on a like-for-like basis. Reckitt attributed this downturn primarily to supply chain disruptions following a tornado at Mount Vernon in July, which adversely affected sales by approximately £100 million.
The company’s strategic approach remains cautiously optimistic as it proceeds with organisational transformation expected to be fully operational by January 2025. This includes restructuring to form three distinct divisions: Reckitt, Essential Home, and Mead Johnson Nutrition. Focus will shift towards high-margin Powerbrands while evaluating strategic alternatives for non-core assets within the Essential Home and Mead Johnson Nutrition portfolios.
Furthermore, a significant leadership overhaul has taken place, filling senior roles with new appointees aimed at steering the company through these changes. Reckitt continues progress on its share buyback scheme, having completed £321 million of the intended £1 billion buyback program. Reflecting upon the quarter’s outcomes, CEO Kris Licht affirmed the third quarter results aligned with mid-year expectations, highlighting sequential improvements in the health segment and resilient growth amidst competitive market challenges.
CEO Licht candidly addressed the nutrition segment’s struggles due to the Mount Vernon incident, yet he emphasised the resilience of its categories and brands, noting an evolving positive growth trajectory. Looking forward, Licht indicated the company is advancing swiftly in its portfolio refinement and organisational simplification efforts, which are geared towards enhancing shareholder value. He anticipates sharing further insights on the operating model and future objectives in the forthcoming full-year results update.
Reckitt is navigating current challenges with a strategic restructuring to enhance growth and resilience, looking ahead to 2025.
