Reckitt Benckiser reels on US probe and cyber-hack hit

Consumer goods giant Reckitt Benckiser on Monday admitted it has taken a £318 million hit amid a US pharmaceuticals probe and is still grappling a devastating cyber attack.

The FTSE 100 firm, behind the Durex and Gaviscon brands, said that it has taken a £318 million provision to cover the potential costs of a US investigation. It is alleged that its RB Pharmaceuticals business, which it spun off in 2014, broke competition and consumer protection laws by trying to keep generic versions of Indivior off the market. Reckitt warned the outcome of the probe could cost the company more.

Separately, the Nurofen maker was first hit by the NotPetya hack on June 27, causing systems to grind to a halt and interrupting output at a number of factories, largely in Europe and Asia.

Reckitt blamed the devastating attack as it posted a 2% second-quarter comparable sales fall. Like-for-like revenues dropped 1% across the first half to £5 billion.

The City was unimpressed and the shares fell by 90p to 7791p.

The company had already cut its growth forecasts from 3% to 2% this month. Chief executive Rakesh Kapoor said: “I see this as a challenging target. We are experiencing tougher market conditions and we still have work to do on addressing the full implications of the recent cyber attack.”

Kapoor admitted it had taken until July 11 to get the majority of its factories back to full health and said it would take until the end of August to fully recover. The firm added: “We continue to face some operational disruption.”

Reckitt Benckiser said it has “significant” security in place, but is reviewing further measures “to minimise both the likelihood and potential impact of any future attacks”.

Kapoor pledged that the company would invest more in cyber security but did not specify in which areas.

RBC Capital Markets analyst James Edwardes Jones said: “This subdued outlook does little to allay our concerns around the robustness of the underlying Reckitt Benckiser business.”

Investec analyst Eddy Hargreaves said: “Overall, the results and commentary are disappointing.”

Kapoor is looking to boost sales and overhaul the business after a string of problems.

The manufacturer has been hurt by a scandal in South Korea over the sale of a toxic product linked to almost 100 deaths, has seen its latest Scholl footwear innovation fail to take off and Kapoor has taken a pay cut to avoid an investor row.

Last week the company revealed it has agreed to sell its food business to US spices maker McCormick for $4.2 billion (£3.2 billion).

The move will allow the firm to focus on its health and hygiene arm and Mead Johnson, the baby formula firm for which it paid $17.9 billion this year.