Reckitt to shed household cleaning brands, consider nutritional options

By Agata Rybska

(Reuters) – Reckitt Benckiser will explore options for its struggling nutrition business and shed a portfolio of home care brands by the end of 2025, it said on Wednesday, planning to refocus on healthcare and hygiene.

Reckitt’s home care portfolio, which includes Air Wick air fresheners and Cillit Bang cleaner, generated sales of about £1.9 billion ($2.5 billion) last year, but the company no longer considers it a core business.

The British consumer goods company has also come under pressure from shareholders to consider a sale of its Mead Johnson nutrition division, which sells infant formula products.

In March, an Illinois jury ordered Mead Johnson to pay $60 million to the mother of a premature baby who died of intestinal disease after being fed the company’s Enfamil Premature 24 formula. The company later said it had filed numerous lawsuits against formula makers in general, and it was unclear how many of them were directly related to its subsidiary’s Enfamil product.

Investors reacted positively to news that Reckitt was considering new options for the company, sending its shares up more than 4% in early trading. The stock later pared some of its gains and was up 1.6% by 1415 GMT.

“That could potentially eliminate another surplus given that that has been a rather problematic part of the business,” said Richard Saldanha, portfolio manager at Aviva.

Reckitt CEO Kris Licht has not ruled out a sale of the nutrition business while the litigation is ongoing.

“I wouldn’t rule it out. I wouldn’t say there’s any certainty about it either,” he told investors on a call to discuss the company’s first-half results.

Jack Martin, investment manager at Oberon Investments, welcomed the decision to sell the home care brands.

“The question now is whether they can do it at an attractive valuation and whether the profits can be reinvested in brands that offer long-term growth opportunities in an efficient manner,” he said.

Reckitt wants to focus on what it calls its core brands, including Strepsils throat lozenges, Nurofen pain relievers, Dettol disinfectant, Finish dishwasher tablets and Durex condoms.

Saldanha supported this plan.

“It certainly makes sense, in our view, for them to focus on allocating capital to those brands to continue to drive future growth,” he said.

The strategic update overshadowed Reckitt’s decision to cut its sales growth forecast for 2024.

SUPPLY DISRUPTIONS

Reckitt missed expectations for second-quarter like-for-like net sales growth. The company now expects full-year like-for-like sales growth of 1% to 3%, compared with a previous forecast of 2% to 4%.

The company blamed the situation on supply disruptions in its infant formula business after a tornado damaged a third-party warehouse in the United States.

Reckitt’s revenue for the quarter was flat, compared with a 0.1% increase expected by analysts according to a consensus provided by the company. Sales volumes declined 2.2%, more than the 1.5% decline expected.

Reckitt will launch a share buyback programme of up to £1bn and increase its interim dividend, it said.

($1 = 0.7763 pounds)

(Reporting by Agata Rybska, editing by Matt Scuffham, Bernadette Baum and Mark Potter)