In a significant legal victory, Reckitt Benckiser has seen its shares rise dramatically following a court decision clearing the company of liability in a contentious infant formula lawsuit.
Reckitt Benckiser, a leading name in the consumer goods sector, experienced a remarkable 10.5% increase in its share price, reaching £51.70. This surge marks the highest point since March, as reported by Reuters. The company’s financial buoyancy is attributed to a jury ruling that exonerated Reckitt’s subsidiary, Mead Johnson, along with Abbott Laboratories, from responsibility for a severe intestinal condition suffered by a premature infant. The lawsuit had alleged that the companies failed to warn about the risks associated with their infant formulas designed for premature babies.
In response to the favourable ruling, Mead Johnson released a statement indicating that the verdict demonstrated the lack of scientific backing for the claims made against them. Abbott Laboratories echoed this sentiment, stating that the decision aligns with what has been consistently asserted by both the medical community and regulatory bodies regarding the safety of preterm infant nutrition products.
Despite this legal success, Reckitt Benckiser’s recent performance has not been without challenges. The company reported a decrease in net sales by 0.5% on a like-for-like basis in the third quarter, attributed to supply shortages affecting its nutrition business. Nevertheless, there is a silver lining, as Reckitt’s sales for the year up to 30 September saw a slight increase of 0.4%, highlighting a degree of resilience amidst operational hurdles.
Reckitt Benckiser’s legal victory has not only fortified its market position but also instilled confidence in its stakeholders about the safety of its nutritional products for infants. While the company navigates supply chain challenges, the recent court ruling is a step towards stabilising its market presence.
