(Bloomberg) -- Reckitt Benckiser Plc sales fell less than expected, offering limited relief for investors concerned about US lawsuits over its formula for premature babies.
Third-quarter sales declined 0.5% on a like-for-like basis, Reckitt said Wednesday, better than a 1.8% drop expected by analyst forecasts compiled by Bloomberg.
The shares rose as much as 2.7% in early trading, yet are still down more than 18% in the last year.
The consumer goods company, which also makes household cleaning products, reaffirmed a full-year outlook of sales growth between 1% and 3%, having downgraded it in July. It expects adjusted operating profit to grow ahead of sales.
The outlook brought a sigh of relief, said RBC analyst James Edwardes Jones in a note. “We also welcome its improved market share growth across its health and hygiene portfolios.”
Reckitt said it’s on track to sell some homecare brands by the end of next year — a plan the company announced in July. It is also reviewing options for its infant formula business, where revenue fell 17.4% in the third quarter. The unit’s performance was hit by a tornado at its Indiana warehouse, also in July.
Legal Action
Reckitt, along with rival Abbott Laboratories, is defending more than 1,000 lawsuits connecting their milk-based formulas to necrotizing enterocolitis in pre-term babies. Abbott and Reckitt dispute the alleged link between the products and the life-threatening bowel illness.
In March jurors awarded an Illinois woman $60 million in damages after her baby died, saying Reckitt’s Mead Johnson Nutrition unit failed to warn her about the risk of the condition.
Billions of dollars are at stake in the legal action, according to Bloomberg Intelligence analysis, but CEO Kris Licht said on a call with journalists that it was too early to talk about settling as key facts have not been established. Still, he added that he kept an open mind: “We will remain on focusing on what’s best for Reckitt shareholders.”
--With assistance from Joel Leon.
(Adds CEO quote, shares.)
©2024 Bloomberg L.P.