Reckitt, the household goods giant behind brands like Dettol and Durex, has encountered a significant setback with an “unsatisfactory” drop in sales over the latest quarter, leading to a sharp decline in share value.
The company disclosed that its revenues for the past year fell approximately £55 million below expectations due to a financial discrepancy, further exacerbating the sales decline. An internal review identified “an understatement” of trade expenses for the fourth quarter and previous quarters of 2023, resulting in an adverse impact on adjusted profits by approximately £35 million.
Reckitt attributed this discrepancy to inappropriate actions by a small group of employees and assured stakeholders that disciplinary measures are being taken. The company emphasised that this incident is isolated and does not affect its outlook for 2024 and medium-term objectives.
Despite the challenges faced in the final quarter of 2023, Reckitt’s CEO, Kris Licht, expressed confidence in the company’s prospects for the future. While acknowledging the unsatisfactory performance, Licht remains optimistic about achieving mid-single-digit growth in the Health and Hygiene segments, driven by a balanced contribution from price, mix, and volume.
Looking at the full-year results for 2023, Reckitt reported a 3.5% increase in like-for-like revenues compared to the previous year, with growth observed across its hygiene and health divisions. However, the company now anticipates more modest growth in the range of 2% to 4% for the coming year.
Despite the long-term optimism, Reckitt’s shares experienced a sharp decline of 9.9% in early trading, reflecting investor concerns over the sales slump and financial discrepancy. As Reckitt navigates these challenges, stakeholders will closely monitor the company’s strategies and performance moving forward.
