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Friday 14 December 2018

Reckitt slashes sales outlook further after cyber attack hit

The Durex-to-Dettol firm revealed another 2% sales hit from the worldwide ransomware attack in June, which wrought havoc across its factories.

Household goods company Reckitt fined
Household goods company Reckitt fined

By Holly Williams, Press Association Deputy City Editor

Household goods giant Reckitt Benckiser has warned over sales for the second time in three months as it grapples with “challenging” markets and the ongoing impact of a recent cyber attack.

The Durex-to-Dettol firm revealed another 2% sales hit from the ransomware attack in June, which significantly disrupted its manufacturing and orders systems across a raft of markets, including the UK.

It also announced a corporate overhaul to reorganise the firm into two divisions – its consumer health business, including recently acquired US infant formula company Mead Johnson, and a home and hygiene arm.

The group reported a 1% fall in group net revenues for the three months to the end of September as it blamed the cyber attack and difficult trading in a number of its markets, including the UK.

It slashed its annual sales outlook as a result, saying it now expects like-for-like sales to be flat over 2017 – down from an already downgraded previous expectation for growth of 2%.

The group had alerted over sales in July, when it warned of a permanent hit to sales after the massive worldwide cyber attack wrought havoc across its factories, wiping 2% off revenues in the quarters that have followed.

Reckitt said in its latest update it was still working to resolve the impact of the attack, with a backlog in its factories still “not fully caught up”.

Rakesh Kapoor, chief executive officer of Reckitt, said the third quarter was a “soft quarter as we experienced both the tail end of known issues, and the impact of a continuing challenging market environment”.

Mr Kapoor said he will also take charge of the consumer health unit, which accounts for 60% of sales, following the shake-up.

Rob de Groot, currently head of Europe and North America, will lead the hygiene and home unit, which includes brands such as Air Wick fresheners and Cillit Bang cleaners.

Reckitt aims to have completed the overhaul and fully integrated Mead Johnson Nutrition – which it bought for $21.2 billion (£16.3 billion) – in the first quarter of next year.

Shares in Reckitt fell 3% after the sales blow.

Analysts said the group’s reorganisation could be the precursor to a split.

Liberum experts said: “In our view, this new structure – and the timing – could be the prelude to a split of the business or a sale of Reckitt Benckiser Hygiene Home, particularly if an attractive asset such as Pfizer’s consumer health division becomes available.”

Press Association

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