The new boss of Reckitt Benckiser today wasted no time in “kitchen sinking” the consumer goods giant as he issued a profit warning.
Laxman Narasimhan admitted a catalogue of errors in its health arm had led him to slash growth forecasts just seven weeks into the job. Investors in the Dettol and Nurofen maker were unimpressed, sending the shares down 5%, or 265p, to 5607p.
The company said annual sales growth would now come in at between 0% and 2%, down from an already-reduced range of 2% to 3%.
Third-quarter comparable sales rose 1.6% but missed forecasts as a drop in demand for its baby food in China and cautious buying of its cold and flu products in the US hurt performance.
The FTSE 100 company also admitted that integrating baby formula maker Mead Johnson, bought for £12 billion in 2017, was proving difficult.
Narasimhan said: “We have had significant disruption in the business from a large integration as well as from organisational changes, in my view too many changes and too quickly, particularly in health.
“Things have gone wrong over the last few years. We ran the engine too hot in places. We had some innovation failures.”
Narasimhan joined from PepsiCo and has spent time touring the business’s divisions and customers in North America, India, China and the Middle East, visiting stores and hospitals. He plans to set out his strategy for the business in February.
“There’s nothing I’ve seen in my travels so far that is not addressable. I’m passionate about fixing this business,” he said.
AJ Bell investment director Russ Mould said: “Kitchen-sinking, or resetting expectations, is a well-rehearsed path in the corporate world although in truth Narasimhan, who joined in September, may have had little choice but to scale back sales expectations after a pretty ropey third quarter.”
