By Siddharth Cavale
(Reuters) – British household goods maker Reckitt Benckiser <RB.L> reported lower than expected second-quarter sales, hurt by a slowdown in demand for infant formula in China, and cut its full-year revenue target.
Shares in Reckitt were down 5.7% at 6,300 pence in early trading.
The Durex condom and Lysol disinfectant maker said it now expects full-year like-for-like sales growth to be between 2% and 3%, down from its previous target of 3% to 4%.
The company said slowing birth rates over the past two years and increasing competition hit demand for its enfamil infant nutrition products in China, its biggest market.
This resulted in like-for like sales in its health business falling 1%, even as sales of its over-the-counter products, such as Mucinex cough medicine, rebounded after several quarters of decline.
By contrast, Danone <DANO.PA> reported strong sales last week for its infant nutrition products in China as its strategy to focus on more premium products paid off.
Overall like-for-like sales growth for Reckitt were flat in the second quarter, missing the 1.9% growth analysts on average had expected, according to a company supplied consensus.
Net revenue rose 2% to 3.08 billion pounds against analysts’ average estimate of 3.13 billion.
The second-quarter report is the last under long-time Chief Executive Rakesh Kapoor, who in September hands over the reins to PepsiCo executive Laxman Narsimhan.
In parting remarks, Kapoor said on a medial call he was disappointed in the company’s performance in the first half of the year, but said he was “confident growth would be second-half weighted.”
(Reporting by Siddharth Cavale; Editing by David Holmes and Louise Heavens)