- Issue regards subsidiary Mead Johnson
- More than 400 lawsuits have been filed
Reckitt Benckiser (RKT) shares fell by more than 15 per cent to a decade-low on Friday after an Illinois court ordered its nutrition subsidiary Mead Johnson to pay $60mn (£47mn) to the mother of a baby who died after being given its Enfamil infant formula. The consumer giant said it stood by the safety of its products and would "pursue all options" to have the verdict overturned.
The court on Wednesday found that Enfamil had caused necrotizing enterocolitis (NEC) in the infant. This was the first trial over the issue in the US, where more than 400 lawsuits have been filed against Reckitt and formula rival Abbott Laboratories (US:ABT) regarding NEC, a bowel disease.
"While we continue to offer our deepest condolences to [mother Jasmine] Watson, we strongly disagree with the jury's decision to fault Mead Johnson and award damages," Reckitt said. "We continue to believe that the allegations from the plaintiff's lawyers in this case were not supported by the science or experts in the medical community."
Nutrition is the Dettol and Lemsip owner's smallest division. It posted £2.4bn of net revenue in the year to 31 December 2023, compared with over £6bn posted by each of the hygeine and health units. Nutrition volumes fell by 10 per cent last year against a tough comparative period when the company benefited from product shortages at Abbott.
The latest setback for the company comes after it missed market expectations for revenue and profit in its fourth quarter. The shares were hit on results day in February after like-for-like net revenue fell 1.2 per cent, with analysts having expected a positive growth figure. Adjusted operating profit and margin postings were also worse than expected. The company also reported compliance issues in the Middle East, with employees disciplined after annual net revenue was hit by £55mn due to "an understatement of trade spend".
