Reckitt shares sink as investors see more trouble from baby formula lawsuits

By Thomson Reuters Mar 15, 2024 | 9:57 AM

(Reuters) – Shares of Reckitt Benckiser dropped more than 15% on Friday to their lowest in a decade on fears that the consumer goods company would face more financial liabilities from lawsuits related to its Enfamil baby formula.

An Illinois jury on Wednesday ordered Reckitt unit Mead Johnson to pay $60 million to the mother of a premature baby who died of an intestinal disease after being fed Enfamil.

The verdict comes in the first trial out of hundreds of lawsuits claiming Enfamil and Abbott Laboratories’ Similac formulas caused a fatal disease, mostly affecting premature newborns.

“It’s not simply the size of this payout which has caused nervousness, but the fact a long line of other lawsuits are pending, which could mount up to be huge sum for the company,” Hargreaves Lansdown analyst Susannah Streeter said.

Shares of the company, which owns brands like Lysol, Dettol and Strepsils, were last down to 4,497 pence at 1443 GMT – the steepest one-day drop since 1999, making them the top loser on London’s blue-chip FTSE 100 index.

They last dropped close to similar levels on Feb. 28, when the company posted disappointing results and said an investigation showed some employees had under-reported liabilities in the Middle East.

“After missing expectations in the fourth quarter, investors were always going to be highly sensitive to setbacks and this judgment has led to a fresh loss of confidence,” Lansdown’s Streeter said.

(Reporting by Eva Mathews in Bengaluru; Editing by Anil D’Silva)