British consumer goods group Reckitt Benckiser lowered its full-year sales growth forecast for 2024 due to supply disruptions at its infant formula business after a tornado damaged a third-party warehouse in the US.
Reckitt, which makes Dettol and Lysol disinfectants, said it had missed like-for-like net sales growth expectations for the second quarter and now expects like-for-like revenue growth of 1-3% for the full year, down from its previous forecast of a 2-4% rise.
The Mount Vernon warehouse in Indiana, out of action since the tornado struck on 9 July, is an important site for the company's Mead Johnson Nutrition business, containing both raw materials and finished products.
Reckitt's like-for-like revenue for the quarter was flat, slightly lagging the 0.1% growth analysts had expected in a company provided consensus, while its sales volume declined 2.2%, more than the 1.5% drop seen in the consensus.
The company's shares rose more than 4% in early trade.
Numbers Don't Really Matter: Analyst
"Today is a day when the numbers don't really matter for Reckitt," says Bernstein analyst Bruno Monteyne.
While the volume miss would normally worry the analyst, he said Reckitt appears to be addressing the lack of strategic rationale behind its portfolio.
The company announced it would sell its home care brands, which it no longer considers to be core, and said it was looking at all strategic options for Mead Johnson, which top shareholders and analysts have said Reckitt should draw a line under.
The British consumer goods company also said it would launch a share buyback of up to £1 billion (€1.19 billion) and increase its interim dividend, which helped boost the share price, analysts said.
