Reckitt cuts sales target as China infant formula demand slows

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Reckitt cuts sales target as China infant formula demand slows

LONDON (Reuters) - Reckitt Benckiser (RB.L) cut its full-year revenue target after reporting lower than expected sales in its last quarter under long-time chief executive Rakesh Kapoor, hurt by a surprise slowdown in demand for infant formula in China.

Shares of the British household goods maker, which had risen the previous day to near their highest level for the year, fell as much as 5.7% in early trade. The Durex condom and Lysol disinfectant maker said on Tuesday it now expected full-year like-for-like sales growth of between 2% and 3%, down from its previous target of 3% to 4%, also blaming a tough market in Europe for its downgrade.

Reckitt, which kept its “broadly flat” operating margin target, said slowing birth rates over the past two years and increased competition had led to market share losses for its Enfamil infant nutrition products in China, its biggest market for baby food.

The company is also recovering from supply chain disruptions in China, after technical issues at a baby formula factory in the Netherlands, which supplies the Asian market, prevented it from supplying retailers with formula in the third quarter of 2018.