Consumer goods maker Reckitt Benckiser (RB) raised annual revenue and profit margin targets after a forecast-beating first-half performance on Monday (27), led by consumer health and hygiene in most of its markets around the world.
Shares in the British manufacturer of Durex condoms, Dettol disinfectant and Nurofen painkillers rose by as much as 2.9 per cent, close to their record high, after it also said it would hit the upper end of targeted cost savings ahead of schedule. Shares have risen 23 per cent over the last year.
Chief executive Rakesh Kapoor said second-half growth would be driven by innovation, with a host of new product launches, including from its Mucinex cold medicine, Scholl footcare, and Airwick air freshener brands.
Over the six months to June 30, RB’s sales rose five per cent on a like-for-like basis, which excludes the impact of currency, acquisitions, disposals and discontinued operations, mirroring first-quarter growth but ahead of analysts’ average forecast of 4.6 per cent.
Adjusted operating margin rose 160 basis points to 21.9 per cent, driving an 11 per cent increase in adjusted operating profit to £953 million at constant exchange rates. Free cash flow generation was £756m.
The firm is trying to boost its presence in consumer health. The sector has been growing fast amid increased demand for over-the-counter remedies and health products due to a greater awareness of health, ageing populations in developed markets and rising incomes and urbanisation in emerging markets.
Kapoor said that while European and north American markets were more stable than a few years ago, developing markets remained mixed.
“While we are seeing improved consumer sentiment in a number of countries, such as India, other geographies, such as Brazil and Indonesia, remain challenging,” he said.
RB is now targeting full-year like-for-like net revenue growth of four-five per cent and second-half moderate to “nice” adjusted operating margin expansion. It previously forecast like-for-like sales growth of four per cent.
Kapoor launched a major cost-savings programme six months ago, targeting annualised savings of £100-£150m over three years.
He said the firm would achieve savings at the upper end of the target, ahead of the stated timeframe.