Slough
Reckitt’s headache: Consumer goods giant Reckitt Benckiser’s fourth-quarter like-for-like sales fell 1.2%, missing expectations of a 1.8% rise, says Dasha Afanasieva on Bloomberg. Reckitt blamed slowing demand for baby milk formula in the US, a weaker cold and flu medicine market, and lower overall consumer price inflation. It also took a £55m hit to revenue from a compliance issue in its Middle East business. The maker of Neurofen and Dettol disinfectant now expects more modest growth of between 2% and 4% this year. It is aiming for mid-single-digit growth in its health and hygiene units in 2024, with the nutrition unit, which makes Enfamil baby formula, returning to growth later in the year. CEO Kris Licht (pictured), who started in October, said Reckitt’s performance was “unsatisfactory”, but he is focused on his turnaround strategy to bolster investment and grow operating profit faster than sales.
Last year was a year in which “price hikes did all the work, with volumes taking a hit in the process”, says Matt Britzman of Hargreaves Lansdown. Cost-cutting has yielded some results, but, looking ahead, “the real question mark is around when volumes will start to turn positive [again] as cost cuts can only support margin growth for so long”.
Cupertino
Apple swaps EVs for AI: Apple has scrapped its decade-long attempt to build an electric vehicle (EV), says Mark Gurman on Bloomberg. Project Titan, as it was known, was Apple’s most ambitious yet, with 2,000 workers on the project, and it was expected to be a valuable source of revenue. Instead, the tech giant is to focus on generative artificial intelligence (AI) and apply AI to current products, such as the iPhone and iPad, to avoid falling further behind OpenAI, Alphabet, Amazon, and Microsoft in developing the technology. Analysts hailed the move to avoid a risky EV industry, as there is more potential for long-term profitability in AI than in cars. But the revenue potential had been significant – Tesla generated $100bn last year. That said, hardware will continue to be Apple’s main source of revenue, and Apple hopes its recently launched $3,500 Vision Pro virtual reality headset, new smart-home devices and AirPods will make up the shortfall from abandoning Project Titan.
Indecision over the project was at the root of Apple’s problems, says Dave Lee, also on Bloomberg. Leadership changes were frequent and it lacked a clear vision. For all the reports about self-driving cars and a new kind of battery, Project Titan was a �
