Shares in Reckitt Benckiser tumbled to a two-year low as investors questioned whether the household goods giant is still at risk of falling short on sales targets after a tough year for the firm.
The company said net revenue came in at £11.5 billion for the year to December 31, with sales flat on a like-for-like basis when excluding exchange rate effects, and the impact of recent acquisitions, disposals and discontinued operations.
A stronger fourth quarter failed to fully counter a year that featured challenging market conditions and significant disruptions following a cyber attack last summer.
Total reported revenue growth for the year grew 21%.
Reckitt is now targeting total revenue growth of 13% to 14% for 2018, and a 2% to 3% rise in like-for-like sales – but investors seemed to have reserved their optimism.
“Having promised the same in 2017 and only delivered flat sales, this pledge seems to have limited credibility with the market. Hence the stock was the biggest faller on the FTSE 100 this morning,” said AJ Bell investment director Russ Mould.
Shares were down 5.4% or 360p at around 6,208p in midday trading.
The Durex-to-Dettol firm warned on sales last year after being hit by a cyber attack last June, which significantly disrupted its manufacturing and orders systems across a raft of markets, including the UK.
It has also been undergoing an overhaul to organise the firm into two divisions – its consumer health business, including recently acquired US infant formula company Mead Johnson, and a home and hygiene arm.
Full-year operating profits came in at £2.74 billion, up 21% compared with a year earlier and up 14% when stripped of currency effects.
We returned to growth after a solid finish to the year, our acquisition of MJN is firmly on track and the creation of two business units will drive long-term growthRakesh Kapoor, chief executive
Commenting on the results, chief executive Rakesh Kapoor said: “2017 was a significant year in RB’s (Reckitt Benckiser’s) journey to become a global leader in consumer health.
“We returned to growth after a solid finish to the year, our acquisition of MJN (Mead Johnson Nutrition) is firmly on track and the creation of two business units – RB Health and RB Hygiene Home – will drive long-term growth.”
He added: “Whilst 2018 will see some specific factors impacting margin, we reiterate our medium-term target of moderate operating margin expansion.”
Neil Wilson, a senior market analyst at ETX Capital said Reckitt’s performance will hinge on whether its reorganisation results in better organic sales.
“But equally it may depend on whether Reckitt can snaffle Pfizer’s consumer healthcare business.”
He also said that while growth in the fourth quarter should be a “positive sign”, investors were “still a little spooked” and “uncertain about whether management is righting the ship”.