Reckitt has forecast another fall in its “nutrition” sales in 2024 as its infant-formula business continues to reset after a bumper 2022.
The UK consumer-goods group said it expects the division, which houses the Enfamil and Nutramigen brands, to see its like-for-like sales fall at a “mid- to high-single-digit” rate this year – after a 4% drop in 2023.
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In a stock-exchange filing, Reckitt said its nutrition arm would “continue to rebase” in the first half of 2024.
Last year, Reckitt’s nutrition sales volumes dropped 10% as the company lapped the growth it saw in 2022, when the group benefited from an infant-formula shortage in the US.
On a reported basis, the group’s nutrition sales revenue was down 3.6% at £2.41bn ($3.05bn). The company reported a 6% rise in “price-mix”, which, combined with the drop in volumes, led to the 4% decline in like-for-like sales.
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Adjusted operating profit for the nutrition division fell 22.5% to £447m. Adjusted operating margin was 18.5%, down 460 basis points, reflecting pressure on volumes as Reckitt lost the benefit from so-called WIC sales in the US, where the company does not hold the government contract.
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By GlobalDataIn the regulated US infant-formula market, the federal government’s Special Supplemental Nutrition Program for Women, Infants and Children (WIC) is the major purchaser of infant formula.
Reckitt’s infant formula business affected its group operating profit. The company said IFRS operating profit was £2.53bn, down from £3.25bn in 2022, impacted by a goodwill impairment of £810m on its infant-formula assets, “reflecting higher interest rates and changes in the regulatory environment”.
Group net revenue was £14.61bn, up 1.1% and 3.5% higher on a like-for-like basis.
It is forecasting a 2-4% rise in group like-for-like net revenue in 2024.
Reckitt has forecast its nutrition business will “return to growth late in the year”.
