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Highlights:
- Reckitt Benckiser (LSE:RKT) is expected to report a 1.2% drop in organic sales for the third quarter.
- Sales of hygiene and health products are forecast to grow by 2.5%, while nutrition sales are expected to decline by 21%.
- Barclays maintains an ‘overweight’ rating on Reckitt shares, citing strategic complexity and market challenges.
Reckitt Benckiser Group PLC (LSE:RKT) is set to report its third-quarter results on Wednesday, 23 October, with analysts forecasting a decline in sales. Barclays analysts expect organic sales to have fallen by 1.2% over the quarter, as weaker pricing outweighed volume growth. This anticipated drop comes as the consumer goods giant faces increasing pressure from competitors and navigates ongoing market challenges.
Barclays suggested that Reckitt likely adopted more promotional strategies in the third quarter to counter the heightened competition. This approach mirrors a broader trend seen across the consumer goods sector, where companies like Nestlé have also struggled with slower sales growth despite efforts to manage pricing amid rising costs. Nestlé recently reduced its full-year guidance following disappointing results over the first nine months, driven by a shift in consumer preferences towards cheaper, non-branded alternatives.
Despite challenges, Barclays noted that sales in Reckitt’s hygiene and health product segments were expected to have grown by 2.5% each in the third quarter. However, its nutrition business remains a significant concern, with sales forecast to decline by 21%, suggesting a "major reset" may be needed before the year’s end.
Barclays highlighted that Reckitt’s strategic transition adds complexity to its current position, as the company navigates legal risks and competitive markets. These factors are reflected in its share price, which has fallen 13.3% this year, reaching 4,732p. However, Barclays maintains an ‘overweight’ rating on Reckitt shares and has set a target price of 5,815p, indicating confidence in the company’s potential recovery.
As Reckitt prepares to release its quarterly results, the market will be closely watching for updates on its strategic adjustments and performance in key product segments, particularly as it deals with competitive pressures and evolving consumer preferences.
