Reckitt saw sales surpass expectations in the third quarter as the consumer giant was boosted by healthcare brands, including Durex condoms and Nurofen.
Sales slipped 0.5 per cent year-on-year to £3.46billion on a like-for-like basis over the period, bringing 2024 revenue growth so far to 0.4 per cent at £10.62billion.
Health and hygiene sales growth of 3.2 and 2.1 per cent respectively for the quarter helped offset a 17.4 per cent slump in nutrition sales.
Reckitt shares have been under pressure from US legal action over its Enfamil formula for premature babies
The sharp fall in nutrition sales was a result of a £100million hit from ‘supply-related’ challenges linked to the July tornado in Mount Vernon, Indiana, where Reckitt has warehousing facilities.
However, Reckitt said the impact reflected ‘better-than-expected recovery of inventories’.
Health revenues were driven by the Durex, Dettol, Gaviscon, Nurofen and VMS brands, while hygiene was boosted by ‘strong contributions’ from Lysol and Finish.
Reckitt warned in July that short-terms sales of Mead Johnson baby formula powder were likely to be affected after a tornado struck the group’s third-party warehouse
Boss Kris Licht said: ‘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 normalising market environment in US Nutrition.
‘We are moving at pace on the execution of reshaping Reckitt through sharpening our portfolio, simplifying the organisation and improving shareholder returns.’
Reckitt shares, which have been under pressure from US legal action over its Enfamil formula for premature babies, were up 3.1 per cent by late morning at 4,912p.
Like its rivals, Reckitt has also faced declining volumes, slowing growth and weaker demand amid a tough consumer environment in many markets.
It has left Reckitt, which continues to defend itself against the allegations, among the London-listed stocks deemed so undervalued that they have become ‘sitting ducks’ for foreign takeover, City analysts have suggested.
The group is in talks over the sale of its homecare assets as part of strategy shake-up.
Reckitt instead plans to focus on its most profitable health products, including Strepsils cough sweets, Nurofen painkillers and Durex.
Adam Vettese, market analyst at eToro, said: ‘Shares have climbed 20 per cent since plunging to decade lows off the back of the legal issues, which is great for any opportunists that got in at that level and somewhat of a relief for longer-term investors, although they are not out of the woods yet.
‘The firm says it is on track to meet its full year guidance which I’m sure shareholders are happy to hear. It is the legal woes however that they really want to see the end of.’
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