RECKITT BENCKISER’S new boss Laxman Narasimhan said last week he will tackle the company’s problems “as a matter of urgency”.
The company was hit by weak sales of cold and flu medicine in the US and poor demand for baby products in China.
Narasimhan took over as the consumer giant’s chief executive officer from Rakesh Kapoor in September.
The UK company’s sales climbed just 1.6 per cent to £3.3 billion during the three months to October.
However, analysts expected that the business would record a sales growth of 3.2 per cent.
Narasimhan said: “This performance is a reflection of an extended period of significant change and disruption in the company. I am prioritising execution and operational performance as a matter of urgency.”
RB now expects sales to either be flat or grow by no more than two per cent in the current year, compared with earlier forecasts of between two per cent and three per cent.
This is for the second time RB has reduced its sales forecast in 2019.
RB chief executive officer added: “I have lowered our revenue outlook for the full year 2019 to reflect the combination of a weak health performance in Q3 and inherent seasonal uncertainty in Q4. We expect a modest margin decline in 2019, as we will continue our investment in the brands and the business to build RB for the long term.”
The Indian-origin RB boss blamed the less than expected performance of his business on a decline within RB’s health division, where sales fell 0.3 per cent.
RB witnessed a fall in orders for cold and flu medicine in the US as the retailers look to reduce costs after failing to sell enough of the seasonal stock last year.
Commenting on the sales data, Narasimhan said: “RB’s performance in Q3 was disappointing. We delivered another quarter of consistent growth in hygiene home. Our health business, despite good market growth and stable consumer offtake, delivered a weak net revenue performance.
”This was primarily due to issues in the US and China. In the US, we saw more cautious retailer seasonal purchasing patterns. In China, IFCN continues to face challenging market conditions.”
The company is also facing fierce competition in China where it recorded a fall in the market share within its infant nutrition business while wrestling with a declining birth rate in the most populous nation in the globe.
Commenting on the future strategies of his business, the Asian-origin top executive said: “I look forward to providing a more detailed update on the business and our plans to restore long-term sustainable performance, in February with our FY19 results.”
The consumer giant is also battling with a consumer shift away from branded drugs to cheaper private-label alternatives.