(Bloomberg) --
Reckitt Benckiser Group Plc struggled over the winter as demand for its Strepsils and Mucinex remedies fell due to a lower number of flu cases and increased competition from private-label medicines.
Sales in Reckitt Benckiser's over-the-counter business fell by about a tenth, dealing the health division another setback after a production glitch for the infant-formula business that previously cut revenue. The company has been seeking stability while searching for a successor to Chief Executive Officer Rakesh Kapoor, who's leaving at the end of this year.
The shares fell as much as 1.7 percent in London early on Thursday, trimming gains to 7.5 percent over the past 12 months.
Comparable sales grew 1 percent in the first quarter, compared with a company-compiled estimate of 1.8 percent. Reckitt Benckiser maintained its full-year targets, saying it expected a stronger second half.
The benign flu season hit sales in the health business, whose management Kapoor assumed when Reckitt Benckiser separated that unit from the company's hygiene and home operations in 2017. The over-the-counter business also suffered from private-label competition to Mucinex, the company said.
It was “comfortably the worst result from OTC” since Reckitt Benckiser started disclosing results from the business separately, Jefferies analysts led by Martin Deboo wrote in a note to investors. Sustained weakness in that business could hurt the company's profitability in the future, Deboo said.
Reckitt Benckiser got a boost from its baby formula business, which had 5 percent growth. That eases concerns about that unit, where the company had faced an initial slowdown after the acquisition of Mead Johnson about two years ago.
To contact the reporter on this story: Thomas Buckley in London at tbuckley25@bloomberg.net
To contact the editor responsible for this story: Eric Pfanner at epfanner1@bloomberg.net
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