22 October 2025
If you are covering Reckitt’s latest financial results, please find below a comment from Chris Beckett, consumer staples analyst at Quilter Cheviot:
“Reckitt has issued a good third quarter update, with strength in emerging markets raising sales growth of the 'core' business to nearly 7% - very impressive in a challenging consumer environment. Group third quarter sales grew 7% beating market expectations by 0.6%. The company achieved a good mix of volume (+4%) and pricing (+3%).
“Regionally emerging markets continued to deliver very strong growth (up 15%) with good contributions from China, Indonesia, Malaysia and Mexico. The Chinese outcome is particularly encouraging in light of the difficult consumer environment. European sales grew almost 1% and North America slightly above that number. Developed market performance showed an encouraging return to growth but both regions were slightly behind expectations.
“The big positive today is the strength of the core ongoing portfolio. Core revenue grew nearly 7% in the quarter including a near equal mix of volume and pricing. By category all parts of the core business performed well except Household where sales of premium brands like Finish and Vanish in Europe were challenging. This strength is encouraging investors to look past litigation uncertainty and the disposal dilution.
“In the other divisions Mead Johnston Nutrition (up 22%) recovered from tornado related disruption a year ago and the sales decline from Essential Home (down 5%) is disappointing but understandable as we approach completion of the majority sale of the business.
“Guidance for the core ongoing business was reiterated looking for 4% plus organic sales growth this year within the medium-term target algorithm of 4-5%. This will be diluted by more modest growth from Mead Johnson Nutrition and an increased decline from Essential Home to leave group expectation for 3-4% sales growth (unchanged). Operating profit is still expected to grow ahead of revenue.
“After recent strength Reckitt trades on 16 times next year's expected earnings, a small discount to its history and peers, but their valuations have been coming back. However, the continuing baby formula litigation uncertainty justifies some of this discount and raises the risk profile of the stock. However, a stock like Haleon shows the valuation prize of a more consumer heath focused better performing business.”
