It has been a rough few years for shareholders in hygiene, health and nutrition products powerhouse Reckitt Benckiser (RKT) with the stock down 30% on a five-year view.

The FTSE 100 company flourished during the pandemic, which heightened hygiene awareness and boosted sales of its Dettol and Lysol disinfection brands, but demand then normalised and the shares have sold-off on growth disappointments and volume declines which demonstrate limits to Reckitt’s pricing power in a cost-of-living crisis.

Reckitt Benckiser’s stock plunged to its lowest level in a decade on 15 March on the revelation a US jury had awarded $60 million to a mother who claimed her infant died after consuming the group’s Enfamil formula. Litigation across the pond, potentially leaving the company on the hook for billions of pounds in damages payouts, is the last thing CEO Kris Licht needs, having only taken over the top job last October, and could even lead to calls for a breakup of Reckitt Benckiser.

The Illinois jury concluded that Enfamil Premature 24, made by Reckitt’s US infant formula business Mead Johnson – acquired in an ill-fated $18 billion takeover in 2017, had caused the bowel disease necrotising enterocolitis (NEC) in Jasmine Watson’s son. Hundreds of similar claims have been filed in state and federal courts across America targeting Mead Johnson and its baby formula manufacturing rival Abbott Laboratories (ABT:NYSE).

In its 15 March response, Reckitt, whose recognisable consumer brands include Cillit Bang, Durex and Gaviscon, said it stands by the safety of its products, will pursue all options to have the verdict overturned and stressed this is ‘a single verdict in a single case and should not be extrapolated’.

Reckitt ‘strongly’ rejects assertions that ‘any of our products cause NEC, a serious gastrointestinal problem that mostly affects premature infants’ and stressed that while it continues to offer ‘our deepest condolences to Ms. Watson, we strongly disagree with the jury’s decision to fault Mead Johnson and award damages. We continue to believe that the allegations from the plaintiff’s lawyers in this case were not supported by the science or experts in the medical community.’

On 28 February 2024, Reckitt reported disappointing fourth quarter results with like-for-like sales in negative territory and warned it had identified an ‘understatement of trade spend’ in two Middle Eastern markets going back beyond the fourth quarter which meant sales net of costs to third parties were £55 million lower than expected. 

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