Reckitt Benckiser plc (RBGLY) posted weaker-than-expected third quarter sales and cut its full year revenue outlook as it cautioned it will reorganise its business and face challenges in the months ahead.
Reckitt said that comparable revenues for the three months ending in September fell 1% to just of £3.2 billion ($4.22 billion), compared to analysts' forecast of a 0.5% like-for-like gain. The group's baby formula business, which it now controls after the closing its $18 billion purchase of Mead Johnson (MJN) earlier this year, saw sales rise 1% and benefited from strong growth in China, the company said.
However, Reckitt said it sees net revenue from Mead to fall by around 2%, or at best be flat to comparable sales last year, for the full 2017 year. It also expects only flat revenue growth for the entire business over its full fiscal year, compared to an adjusted target of 2% growth it forecast when it reported second quarter earnings in July.
"We have made great progress over the last five years, as we have transformed our Group into one where consumer health now represents more than half of our business," said Reckitt CEO Rakesh Kapoor. "We are working to create two focused, agile and fully accountable Business Units - RB Health (incorporating MJN) and RB Hygiene Home, effective from Q1 2018."
"I will lead the new Health business directly and Rob De Groot, who is currently our head of ENA, will become President of the Hygiene Home business, reporting to me," Kapoor added.
Reckitt, whose brands include Durex condoms and Lysol disinfectants, had cautioned in July that its second quarter revenues would take a significant hit as a result of the impact of the petya cyber attack that spread across Europe and Asia over the summer.
Reckitt shares closed at 7,055.63 pence each in London Tuesday after rising 0.29% on the session to trim their three-month decline to around 9.15%.
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