More than 5 per cent was wiped off the market capitalisation of the consumer goods giant Reckitt Benckiser yesterday after its fourth-quarter results failed to meet City expectations.
Reckitt, which makes Finish dishwasher powder and Vanish stain remover, also revealed that it paid a higher underlying tax rate of 26 per cent in 2010, up 1 per cent, owing to "the less benign tax environment" in a number of countries.
For the fourth quarter to 31 December, Reckitt's adjusted operating profit rose by 10 per cent to £516m, but the City was disappointed in the margin improvement of 120 basis points in its base business, against a consensus forecast of a 230bps uplift. Andrew Wood, an analyst at Bernstein, said: "This does not feel like a Reckitt Benckiser set of results."
Furthermore, the company's forecast of a 4 per cent rise in like-for-like income for this year – excluding revenues from its acquisition of SSL, the Durex condoms to Scholl shoes group – is down on the 6 per cent growth delivered last year.
But Bart Becht, the chief executive of Reckitt, said: "This net revenue target compares to a global market which is currently showing no growth."
Shares in Reckitt Benckiser tumbled by 175p to 3,270p.
The company's pre-tax profit fell by 1.6 per cent to £597m in the fourth quarter, as a result of one-off costs related to its £2.54bn takeover of SSL, which was unveiled in July and is expected to complete by early April. Reckitt's fabric care business saw revenues slip by 1 per cent to £1.58bn over the full year, as it continued to battle intense competition from rivals on price.
But net revenues for its pharmaceuticals division's Subutex and Suboxone prescription drugs, which are used to treate opiate dependence, grew by 24 per cent to £737m. While its Suboxone tablets can be subject to generic competition at any time, Reckitt has moved more of its business into the patented-protected Suboxone film.
For 2010, pre-tax profits at Reckitt rose by 13 per cent to £2.14bn on revenues up by 9 per cent to £8.45bn.