Reckitt shares rise as Q3 results beat expectations, full-year guidance reaffirmed

Investing.com — Shares of Reckitt Benckiser Group (LON:RKT) rose on Wednesday after the company posted its third-quarter trading update.

At 4:35 am (0835 GMT), Reckitt Benckiser Group was trading 3.2% higher at £4,917.

The British-Dutch consumer goods giant reiterated its full-year targets and showed signs of improved market share growth in key areas like Health and Hygiene in its trading update on Wednesday.

Reckitt reported a 0.5% decline in organic revenue for Q3, which, while negative, was better than the market’s expectation of a 1.7% drop.

“We are reassured by Reckitt’s trading statement and its reiteration of full-year target. We also welcome its improved market share growth across its Health and Hygiene portfolios,” said analysts at RBC Capital Markets in a note. 

Reckitt’s Health division mirrored positive trends seen by industry peer Haleon, while Nutrition showed signs of recovery following the inventory challenges caused by the Mount Vernon tornado in July, as per RBC. 

However, the company’s Hygiene business slightly underperformed expectations. Reckitt noted that this segment faced tough comparisons due to the timing of major product launches in the prior year, as well as a competitive market environment. 

Despite this, the company remains confident in its full-year outlook, maintaining its guidance for mid-single-digit growth in the Health and Hygiene segments.

“Our Q3 delivery is in line with our guidance at the half year. Health delivered sequential improvement in the quarter and Hygiene delivered a solid quarter of growth despite a more competitive market backdrop in developed markets,” said Kris Licht, chief executive at Reckitt in a statement.

The Essential Home division, which Reckitt confirmed is on track to exit by the end of 2025, has been a major development in the company’s restructuring efforts. 

As part of the transition, the company has appointed a seasoned leadership team.

Reckitt has reiterated its full-year sales growth guidance in the range of 1-3%, in line with consensus expectations. 

The company also adjusted its forecast for Nutrition, now expecting a smaller decline in the high-single digits, compared to the larger drop previously anticipated.

“We believe Reckitt is over-earning, however the shares’ de-rating reflects this if and there’s an opportunity for Reckitt to step up investment,” said analysts at RBC.