Patience must be running out among investors in Reckitt. Already this year they have taken the massive write-down hit on its disastrous $13 billion takeover of baby formula group Mead.
Today they are treated to results which are worse than disappointing.
Every Londoner will have seen Dettol-branded hand sanitiser dispensers at the entrance to tube stations for the past year. Yet we learn that sales of Dettol fell by low double-digits in the first half of this year.
In fact, using the most generous like-for-like measure, sales were down 1% in the three months to the end of June for the whole group.
And Reckitt has another bitter pill for its shareholders to swallow. It says profit margins for this year are now going to be lower than they were in 2020. That sent analysts scurrying to their spreadsheets to cut their forecasts.
Inflation which is normally seen as good for consumer companies seems likely to hurt Reckitt as it struggles to put its prices up until late this year or even early next.
Which makes it all the more galling that large chunks of today’s statement are gobbledygook. What on earth does this mean?
“The brand equity is particularly strong as seen by the amount of new repertoire consumers attracted to the brand at the height of the pandemic and are therefore structurally better positioned to grow into new places and new spaces in the future.”
Me, neither.
If it’s part of a garbled message promising jam tomorrow it most singularly fails.
And if you weren’t sure on that front, Reckitt reminds us that it is still “rebasing” its dividend to get it back to the level where it is twice covered by earning per share.
In other words don’t expect a rise any time soon.
Investors will look to the skies to see if the private equity vultures are circling.
After all, Reckitt is worth some 10% less today than it was yesterday.
