Reckitt, the owner of Dettol and Lysol, faced a sales decline in Q3 due to nutrition supply shortages.
- Despite a 0.5% dip in quarterly net sales like-for-like, the year saw a modest 0.4% growth.
- The nutrition sector was hit by a tornado, causing supply challenges worth £100m.
- Health and hygiene divisions showed resilience with sequential market share growth.
- Reckitt aims for a full-year net sales growth between 1% and 3% despite challenges.
Reckitt, known for brands like Dettol and Lysol, encountered a decline in sales during the third quarter as its nutrition segment was affected by supply constraints. The company’s net sales decreased by 0.5% on a like-for-like basis during this period, although for the year ending September 30, sales had increased by a modest 0.4%. This apparent yearly growth resulted from a 2.8% rise in the health and hygiene sectors, which was unfortunately counterbalanced by significant setbacks in the nutrition division.
The decline in the nutrition sector was stark, with like-for-like sales falling by 11.6% over the year and plummeting 17.4% in the third quarter. These challenges primarily stemmed from the disruption caused by a tornado in July at Mount Vernon, which resulted in a loss of finished goods and raw materials, thereby impacting short-term supplies to customers to the tune of £100 million.
Conversely, the health and hygiene divisions exhibited robustness with market share improvements noted ‘sequentially.’ Both divisions experienced an increase in volume momentum, reporting upticks of 0.7% and 1.2% respectively over the third quarter. The hygiene division, in particular, saw sales rise by 3.7% over the year and 2.1% during the third quarter. Notably, there was significant growth in Lysol, which achieved high single-digit expansions in market share within established surface disinfection spray and wipe segments. Other brands, such as Finish, Air Wick, Vanish, and Harpic, also contributed to this growth.
Looking forward, Reckitt projects a full-year like-for-like net sales growth ranging from 1% to 3%. The firm anticipates reaching the lower spectrum of its mid-single-digit growth target for its health and hygiene sectors. Meanwhile, expectations for the nutrition segment have been adjusted to predict a high single-digit decline as opposed to a previously anticipated low double-digit fall.
Chief Executive Kris Licht expressed optimism regarding the company’s strategic direction, stating, “Our categories are resilient, our brands are strong and we are now seeing a more balanced algorithm for growth. We are on track to deliver our net revenue and profit targets for 2024, with increased investment across our more competitive categories and markets, improving market share performance across our health and hygiene portfolios, and a normalizing market environment in US nutrition.”
Reckitt remains on course to meet its 2024 targets despite recent adversities, thanks to strategic resilience and market adaptations.
