Consumer goods giant Reckitt Benckiser’s shares fell six per cent in morning trading after posting a worse than expected sales performance in the first quarter.
The company, which owns household brands including Dettol, Clearasil and Gaviscon, reported a two per cent increase in sales on a like-for-like basis during the period.
Analysts, in contrast, had been expecting a rise of 2.6 per cent.
Bitter pill: Pharmaceutical giant Reckitt Benckiser, which makes Nurofen, saw its shares fell six per cent in morning trading after posting a worse than expected Q1 sales performance
The group, however, boosted revenues by 49 per cent to £3.1billion in Q1 after including last year’s £12.8bn acquisition of nutrition specialist Mead Johnson.
Pro-forma sales were also up three per cent thanks to a six per cent raise at Mead, benefitting from strong demand in China.
However, the company was hit by ‘significant underperformance’ from Scholl.
The footcare brand brought down sales in Reckitt Benckiser’s health division by two percentage points, more than offsetting gains from Durex and VMS sales to finish with like-for-like sales growth of one per cent.
The company is expecting further declines from Scholl in the short term, but has responded by bringing forward other projects to balance the business.
Despite missing targets, Reckitt Benckiser reassured investors that it was on track to grow its full-year revenues by between two and three per cent.
The company did not explicitly refer to its recent decision to pull out of a bid for Pfizer’s health business after Johnson & Johnson decided to walk away from the doomed auction.
Pulling the plug: Reckitt Benckiser did not refer to its decision to pull out of a bid for Pfizer’s health business after Johnson & Johnson decided to walk away from the doomed auction
However, Rakesh Kapoor, Reckitt Benckiser’s chief executive, said the company was not looking to grow through further acquisitions.
Mr Kapoor said: ‘Our priority remains organic growth under our new focused organisation structure. The integration of Mead Johnson is going well.
‘We have work to do in parts of our health portfolio, particularly Scholl. I am very pleased to see such energy, focus and a strong start by the hygiene home team.’
Russ Mould, investment director at AJ Bell, said the company was ‘struggling to bounce back’ after delivering its worst annual performance last year.
‘In part this is due to pricing pressure, something which raises uncomfortable questions about the strength of the company’s brand portfolio,’ he said.
‘Having endured a damaging cyber attack and messed up a new product introduction last year, chief executive Rakesh Kapoor has made a great play of prioritising organic growth; little wonder then that the shares have been marked lower today.’