Reckitt warns of slowdown
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Your support makes all the difference.RECKITT & COLMAN'S sales have slowed in the last three months and will not now meet the 5 per cent growth target for the current year, the company warned yesterday. Launch costs in Europe for new products will also hit profits.
Reckitt had made disappointing profits of pounds 152.4m for the six months to 4 July, well below stock market forecasts. Analysts immediately scaled back profit forecasts for the year from pounds 230m to pounds 295m-pounds 300m, compared with last year's pounds 299m, and the shares fell in line with the forecasts, closing 150p lower at 900p.
Trading in Europe, South Asia, Africa and the Middle East, and Australasia is on target, but sales have fallen in East Asia and Latin America, which account for about 20 per cent of group turnover.
Sales in North America, which accounts for a third of total turnover, have also taken a knock from the introduction of "efficient consumer response," the retail equivalent of just-in-time delivery. ECR is sweeping North America, leading to sharp falls in retail stock requirements.
The US economy is healthy and the market shares of Reckitt's brands, which include Disprin, Lemsip and Cherry Blossom as well as Airwick, Harpic and Mr Sheen, remain strong, but Reckitt's like-for-like sales will grow by under 2 per cent this year, the company admitted.
Bigger rivals, including Unilever and Procter & Gamble, have also been affected by ECR, which is expected to spread right across the US market over the next two to three years. Unilever shares shed 20.5p to 621.5p.
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