By Aimee Look
Reckitt Benckiser's shares dropped after the Lysol disinfectant maker noted a potential hit to first-quarter over-the-counter sales in Europe from a weak cold and flu season.
The British consumer-goods giant, which also makes products like Durex condoms and Mucinex cold medicine, said Thursday that its seasonal over-the-counter medications business would be impacted in the first three months of the year.
"We expect a continued challenging trading environment in Europe," Reckitt Benckiser added.
The hit to Reckitt's over-the-counter health product demand overshadowed better-than-expected sales growth, Dan Coatsworth, head of markets at AJ Bell said in a note. "A weak cold and flu season may be good news for most, but it has left Reckitt's share price in sluggish mode."
Shares fell 6.6% in early afternoon trading in London.
The warning comes after U.K. peer Haleon also grappled with lower sales this cold and flu season and noted a hit to its top line.
Looking ahead, Reckitt expects core like-for-like revenue for the group this year to rise 4% to 5%, which is in line with medium-term guidance. This compares with 5% growth last year.
Net sales in 2025 rose to 14.21 billion pounds from 14.17 billion pounds the year before, helped by 15% growth in emerging markets, but slightly missed market expectations of 14.23 billion pounds, according to estimates compiled by the company.
Pretax profit jumped to 3.84 billion pounds from 2.10 billion pounds.
"Reckitt faces a challenge in the West from people trading down to unbranded alternatives as household budgets remain under pressure," Coatsworth said. "In the developing world, such safe and cheaper alternatives do not exist to anywhere near the same extent and that is supporting growth for Reckitt in these regions."
Reckitt's emerging markets growth, which includes countries like India and China, mirrors patterns of its competitors, such as Advil-maker Haleon and Unilever, which makes Dove soap.
Reckitt has undertaken a broad strategic overhaul as it slims down its product portfolio to focus on revamping its 11 "powerbrands," joining a broader trend among consumer peers to reign in sprawling portfolios. The company has grappled with various hurdles in recent years, such as litigation over its baby-formula business Mead Johnson Nutrition.
Meanwhile, the war in the Middle East currently doesn't seem to pose a prominent threat to its growth in emerging markets, Chief Executive Officer Kris Licht said in an interview Thursday.
"We've been through many geopolitical events and macroeconomic events in the last years and our supply chain has performed really well through those different impacts," he said.
Write to Aimee Look at aimee.look@wsj.com
(END) Dow Jones Newswires
03-05-26 0753ET
