Reckitt shares fall as it counts cost of cyber attack last month
The maker of Durex condoms and Lysol disinfectants has been struggling for months with fallout from a collapse of its business in South Korea and a failed Scholl product launch last year. Its shares were down around 3% at one stage, weighing on the FTSE.
But on June 27, it became one of several major companies to be blindsided by the NotPetya virus, which hobbled systems for everything from manufacturing to shipping. It cut its full-year sales forecast earlier this month from growth of 3% to growth of 2%.
“I see this as a challenging target,” chief executive Rakesh Kapoor said. “We are experiencing tougher market conditions, and we still have work to do on addressing the full implications of the recent cyber-attack.”
The majority of its systems and key manufacturing sites are now producing near full capacity, but Reckitt said it had not yet returned to normal operations everywhere. Most issues will be resolved during the current third quarter.
Like-for-like sales fell 2% in the second quarter, as the company had warned earlier this month. Excluding the attack and tax changes in India, sales would have been flat, as they were in the first quarter, which was Reckitt’s weakest in 15 years.
“This does not stop it being a very poor performance — the worst in the history of Reckitt Benckiser — from a company that has previously set the benchmark for topline growth,” said analysts at Bernstein.
For the first six months of the year, like-for-like revenue fell 1% to £5.02bn (€5.59bn). Adjusted net income rose 14% and earnings per share rose 15% to 124.9 pence.
Reckitt has said that performance in the second half of the year will improve, as comparisons ease. Reckitt’s shares got a boost last week when it announced the sale of its North American food business to McCormick for $4.2bn (€3.59bn).
Reckitt sold the business in order to pay down debt from its purchase of baby formula maker Mead Johnson. It said it closed the Mead Johnson deal a quarter ahead of expectations and therefore expects to realise cost-savings more quickly than it initially laid out.
Reckitt also said it was taking a provision of £318m related to ongoing investigations by the US Department of Justice into Indivior, which Reckitt spun off in 2014. Reuters
