Reckitt Benckiser unveils £1bn share buyback

Reckitt Benckiser unveiled plans to return £1bn to shareholders on Wednesday, as new chief executive Kris Licht laid out plans to boost revenues over the medium term.

Licht, who took over at the start of the month, said the consumer goods company’s strong free cashflow generation and balance sheet meant it could boost shareholder returns via a £1bn share buyback programme, carried out over the next 12 months.

He also pledged to continue growing dividends.

Licht, who has been at Reckitt Benckiser since 2019, most recently as chief customer officer, said the firm's "excellent" portfolio of brands meant it was well-positioned to deliver "mid-single digit like-for-like net revenue growth over the medium term".

He continued: "Our pipeline of large innovation platforms gives me continuing confidence to deliver mid-single digit net revenue growth.

"We do, however, have room to sharpen and improve. We will continue to invest in the superiority of our products, work to improve the consistency of our in-market execution and optimise our cost base.

"At the same time, we will constantly sharpen our portfolio in line with our clear principles for portfolio value creation."

However, the share buy back was unable to stop the stock falling, after Reckitt posted a 3.4% uptick in third-quarter like-for-like sales, to £3.6bn, below analyst expectations for a 3.7% improvement.

Hygiene sales rose 8.1%, boosted by brands such as Finish and Vanish, while health - which includes Durex and Nurofen - improved 5.4%.

But nutrition fell sharply, down 11.9%, hit by tough comparatives after the firm temporarily benefited last year from competitor supply issues in the US.

On a total basis, sales fell 3.6%, with nutrition down 15.4% and health falling 3.3% on the same basis.

Group volumes were also lower, down 4.1%, while the price-mix rose 7.5%.

By noon, the FTSE 100 stock was off 5% at 5,598p.

However, Reckitt reiterated its target for full-year, like-for-like net revenue growth of between 3% and 5%, with adjusted operating margins "slightly above" 2022 levels once the impact of US nutrition is stripped out.

Danni Hewson, head of financial analysis at AJ Bell, said: “A £1bn share buyback is not enough to blind shareholders to an uncertain start from new boss Licht, with like-for-like sales coming in slightly below expectations and the nutrition business having a rough quarter.

“[Reckitt] saw a pretty significant drop in volumes across the board, compensated for by rising prices. There may be concern in the market that reflects a shift in consumer behaviour, with people switching out of the likes of Nurofen and Finish dishwasher tablets into own-brand alternatives.

“Licht has a job on his hands to demonstrate Reckitt can continue to thrive in a tough consumer environment.”