Household goods giant Reckitt has revealed plans to return £1 billion to shareholders through share buybacks as its new boss said there was room to “sharpen and improve” under a strategy overhaul.
The maker of brands including Dettol, Vanish and Durex condoms saw shares fall 6% as third quarter sales came in below expectations.
Like-for-like revenues lifted 3.4% with currency movements stripped out, against the 3.7% consensus expected, while it also revealed that this was boosted by price hikes.
Sales by volume fell 4.1% over the quarter.
Consumers have been trading down to cheaper unlabelled alternatives to save money in the face of inflation pressures and rising prices, which has been taking its toll on the likes of Reckitt.
The group’s new chief executive Kris Licht – who started in the role on October 1 – unveiled a £1 billion share buyback over the next year as part of a strategy update that will see the group boost shareholder returns.
He said despite the group’s strengths, “we do, however, have room to sharpen and improve”.
He added: “We will continue to invest in the superiority of our products, work to improve the consistency of our in-market execution and optimise our cost base.
“At the same time, we will constantly sharpen our portfolio in line with our clear principles for portfolio value creation.”
Our strong free cashflow generation and healthy balance sheet enable us to commence an enhanced shareholder return programme, including new £1bn share buyback.
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— Reckitt (@ThisIsReckitt) October 25, 2023
Mr Licht took over from Nicandro Durante, who had been the interim chief executive of the global firm since the end of September 2022, when his predecessor Laxman Narasimhan left to relocate back to the US for personal reasons.
He said the group would continue to target “mid-single digit” like-for-like sales growth over the medium term.
The third quarter update showed sales were hit hard in its nutrition division, down 11.9%, as it came up against tough comparisons from a year earlier when the recall of a rival US-based firm’s infant formula gave a boost to sales of Reckitt’s Enfamil products.
Mr Licht said: “We are firmly on track to deliver our full year targets, despite some tough prior year comparatives that we continue to face in our US nutrition business and across our OTC (over the counter) portfolio in the fourth quarter.”