Reckitt Benckiser has lowered its full-year sales guidance and announced price increases on certain product lines in Europe, citing rising costs from the Iran war and disruption to production of its Lysol cleaner.
The FTSE 100 household goods giant now expects like-for-like growth of between 3.5% and 4.5% for its core business this year, down from its previous forecast of 4% to 5% growth. The revision follows a slump in North American sales triggered by manufacturing disruption to Lysol.
Price rises and regional performance
The company, which owns brands including Gaviscon and Vanish, said it had taken "selective pricing actions" across Europe to offset inflation driven by the Middle East conflict. Prices climbed by 4% in the three months to September 30.
This helped the group return to sales growth in its Europe, Australia and New Zealand division, despite "subdued" consumer confidence as shoppers turned to budget rivals. The division posted a 0.8% rise in like-for-like sales during the third quarter, although volumes fell by 3.2%.
Reckitt, which has bases in Hull and Slough, said: "Consumer confidence across the area remains subdued, with elevated promotional activity and value-seeking behaviour driving share growth for discount retailers which has impacted volumes, particularly in germ protection."
North America and outlook
North American sales declined by 1.3% in the third quarter. The company said it expects both Lysol and its broader North American operations to recover in the final quarter of the year once temporary manufacturing challenges are resolved.
Overall like-for-like sales rose 3.3% across its core business, excluding Mead Johnson Nutrition and the disposal of its Essential Home division.
Kris Licht, chief executive of Reckitt, said: "North America was below our expectations. While consumer demand for Lysol remains strong, temporary manufacturing constraints limited our ability to fully meet demand."
Shares in the company tumbled 6% during Tuesday morning trading. Chris Beauchamp, chief market analyst at IG, said: "Investors shouldn't let the US miss sour them too much on the prospects for Reckitt. Growth looks much more broad-based, and with North American trading expected to recover in the fourth quarter, there are still reasons to be optimistic."
