Reckitt Benckiser shares fall by 1.2% despite a 15% growth in total revenue
Category: Investments, Shares
As Reckitt Benckiser reports its Q1 results, Graham Spooner, our investment research analyst, explains what it could mean for investors.
- Reckitt Benckiser said Q1 trading was in line with expectations
- Management confident that underlying business remains strong despite challenging economic conditions
- We recommend Reckitt Benckiser as a ‘Buy’ for lower risk investors with a balanced portfolio
In a first quarter trading update released this morning, household goods and cleaning product company Reckitt Benckiser said that trading was in line with expectations and that it’s on track for the firm’s targeted 3% revenue growth. The FTSE 100 listed company, whose brands include Cillit Bang, Clearasil, Vanish and Harpic also said that total revenue for the first quarter grew by 15% to £2.64bn, this figure however was inflated strongly by currency movements, resulting in a 1.2% fall in early trading this morning. Investors should acknowledge that the firm emphasised the current challenging economic conditions, but nevertheless, the CEO asserted that the firm’s underlying business remains strong as they outperformed in its consumer health business.
Interested investors should note that the group has started a strategic review of its food business in which its exploring different options including plans to sell off brands such as French’s mustard and Frank’s Hot sauce to fund its acquisition of baby milk produced Mead Johnson and to enable it to reduce its debt. The company stated that it anticipates this acquisition will be completed by the end of Q3 as it continues to progress well.
We have long been fans of the company for the lower risk investor as it has proven to be an excellent and consistent performer over the last 16 years. As a result, we continue to recommend Reckitt Benckiser as a ‘buy’ for lower risk investors with a balanced portfolio.
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