Reckitt Benckiser shares are offside this morning after the company announced flat like-for-like sales growth in the fourth quarter, the impact of a major cyber-attack last year continuing to be felt by multiple divisions within its global reach.

The household goods giant is going through somewhat of a transition period after its blockbuster $16.6bn takeover of US baby milk producer Mead Johnson in June last year. And while the acquisition helped to more than triple annual profits on a year earlier (£6.17bn) while maintaining revenue growth (at least in Q4), disappointing like-for-like sales figures, missing analysts’ expectations, are taking precedent this morning.

Furthermore, the significant overhaul of its business structure – splitting the company into two distinct parts (Health and Home & Hygiene) – failed to negate lacklustre growth. In fact, LFL sales in the latter segment were the standout laggard (Hygiene 2.0% vs 3.5% exp; Home -3.0% vs 0.0% exp), trumping the former’s benefit from one of the hardest hitting flu seasons in recent years.

Some shareholders may be encouraged by the pledge from management to continue its overhaul to combat weak sales growth, however this has not been enough to discourage disappointed investors from jumping ship this morning.

The challenge now facing CEO Kapoor is keeping remaining shareholders on board by translating the positive short-term impact of the Mead acquisition into long-term growth, meeting increased synergy expectations of around $300m over the next three years, while proving that the change in business structure will be genuinely beneficial in the long run rather than just a consolidation of underperforming segments for the sake of reporting.

Today the company has been diagnosed with a tickly cough. Avoiding any incubation of this into a more serious illness will be the company’s main aim.

Henry Croft, Research Analyst, 19 February 2018