Reckitt Shares Decline Despite Emerging Market Sales Beat
Reckitt shares dropped over 6% as cautious margin guidance and tax headwinds offset a quarterly sales beat driven by strong growth in emerging markets.
Shares in the United Kingdom-based consumer goods giant Reckitt Benckiser Group plc experienced their sharpest daily decline in 11 months on Thursday. Despite reporting a quarterly sales beat driven by robust performance in emerging markets, investors reacted negatively to the company's cautious outlook regarding profit margins and earnings per share. The manufacturer of Durex and Lysol posted group like-for-like net revenue growth of 5.4% for the quarter ending December 31, surpassing the 4.7% consensus estimate. This growth was largely propelled by a 17.2% surge in revenue from emerging markets, specifically China and India. In contrast, European markets saw a 4.5% decline during the same period.
Like its industry peers Unilever PLC and NESTLE SA - NEW, the company has been restructuring its portfolio to prioritize high-growth brands. A significant step in this strategy was the $4.8 billion sale of its Essential Home division to Advent International. However, the company noted that stranded costs following the divestiture could pressure core margins, a factor that contributed to the share price slump.
