Reckitt reported a smaller-than-expected 0.5% fall in third-quarter underlying sales, outperforming analysts’ forecast of a 1.7% decline. The uptick in sales was driven by the strong performance of its healthcare products, such as Nurofen painkillers and Strepsils lozenges, helping the company regain investor confidence after a challenging year. Shares rose over 3% in early morning trading, with signs of improving volumes welcomed by the market.
The consumer goods group faced setbacks earlier in the year due to an internal investigation in its Middle Eastern business and litigation involving Mead Johnson, its U.S.-based infant nutrition brand. In response, Reckitt announced plans to divest its homecare portfolio by 2025 and focus more on healthcare and hygiene. The company is still considering options for Mead Johnson amid ongoing legal uncertainties.
CEO Kris Licht acknowledged organizational changes could result from the ongoing review, potentially affecting staffing levels. Despite a 14% drop in sales volumes for its nutrition business—due in part to a supply shortage caused by a tornado—the company remains on track to meet its full-year targets. The healthcare segment’s resilience has provided some relief, with price/mix rising 0.9% and overall volumes only declining by 1.4%, better than anticipated.
Analysts view Reckitt’s results as a relief after a difficult period, but concerns over litigation and the potential impacts of restructuring linger.