Reckitt’s Shares Drop Despite £1 Billion Buyback Program

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Shares of Reckitt (RKT, -4.83%) suffered a nearly 7% decline on Wednesday, despite the commencement of a £1 billion buyback program. The consumer goods group fell short of revenue expectations, with third-quarter like-for-like net sales only rising by 3.4%, lower than the company-provided analyst consensus of 3.7% growth. This poor performance was attributed to the nutrition division.

Reckitt CEO Kris Licht, who assumed his role at the beginning of October, remained optimistic about meeting full-year targets. However, analysts raised concerns over potential margin slips, despite the positive news surrounding the share repurchase program.

While the headline-grabbing £1 billion share buyback program caught attention, some experts believe the real impact on shares will come from Reckitt’s departure from its mid-20% operating margin target. Steve Clayton, Head of Equity Funds at Hargreaves Lansdown, stated, “CEO Licht sees solid underlying demand growth across the portfolio, but a need to sharpen execution in some areas.”

As a result of Wednesday’s share price drop, Reckitt is currently down approximately 3% for 2023. In comparison, the U.K.’s FTSE 100 (UK:UKX) experienced a modest 0.8% decline during the same period. European markets, including Frankfurt’s DAX (DX:DAX) and Paris’ CAC 40 (FR:PX1), also saw slight losses as investors grappled with a slew of earnings and trading updates.

Stay tuned for updates on Reckitt’s progress as it navigates the challenging market conditions.

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Notable Performances in the Market

The financial markets saw some notable performances from various companies. Here are some highlights:

Deutsche Bank (DBK) Plans to Capitalize on Market Volatility

Deutsche Bank (DBK) experienced a significant increase in its shares, rising almost 7%. The German bank revealed its plans to profit from the growing volatility in global markets. Additionally, it aims to boost shareholder returns by utilizing an extra €3 billion ($3.173 billion) worth of capital that it expects to free up by 2025.

Lloyds Banking (LLOY) Reassures Investors

Lloyds Banking (LLOY) delivered positive results, soothing investor concerns and causing its shares to rise by 2%. Danni Hewson, head of financial analysis at AJ Bell, highlighted Lloyds’ update, stating that the bank did not downgrade its full-year expectations for the key net interest margin metric, unlike its rival Barclays.

Dassault Systemes (DSY) Surpasses Analyst Expectations

French software maker Dassault Systemes (DSY) impressed analysts with its third-quarter revenue and operating profit, which exceeded expectations. As a result, the company’s shares soared by 9%.

Decline in Revenues for Kering (KER)

Luxury goods group Kering (KER) experienced a slight decline in revenues during the third quarter. The sales of its top two brands, Gucci and Saint Laurent, dropped by 14% and 16%, respectively. Consequently, Kering’s shares fell by 3%.

Worldline (WLN) Faces Setback

Paris-listed payments company Worldline (WLN) had a challenging day in the market, with its shares plummeting by 58%. The company revised its guidance significantly downward, attributing the decline to a deteriorating business environment in Germany.

Positive Business Sentiment Improves German Bond Yield

The German 10-year bund yield (BX:TMBMKDE-10Y) saw a rise of 3.2 basis points, reaching 2.858%. This increase came after a report indicated an improvement in business sentiment in Europe’s largest economy during October. It marked the first positive movement in five consecutive months of decline. As a result, the European Central Bank is expected to maintain its deposit rate at 4% following its upcoming policy meeting.

Read: ECB seen pausing as economy sputters

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