Reckitt share price opens higher as company reports bumper Q1 sales
Shares in Reckitt Benckiser (LON:RB) rose almost one percent at the opening bell this morning after the British consumer goods maker reported better-than expected quarterly sales and stood by its full-year target.
Reckitt posted a rise in like-for-like sales in the first quarter of five percent to £2.2 billion, with solid performances in its health and hygiene franchises slightly offset by like-for-like sales declines in its home and portfolio businesses. The company was expected to have generated a four percent sales increase, according to the City analysts.
The health unit’s revenue growth was 13 percent, as a strong cold and flu season boosted sales of Reckitts’ Nurofen, Gaviscon, Strepsils, Durex and Airborne brands. The group’s hygiene division posted a three percent revenue increase, with solid growth in its Dettol and Harpic brands. Like-for-like sales declined one percent in the company’s home product arm, with good growth of its Vanish products offset by a slow start for its Air Wick brands. Sales also shrank three percent in Reckitt’s portfolio division, which predominantly includes laundry detergents and fabric softeners, with both of those product lines putting up a weak performance.
The consumer goods giant reported broad-based growth across all key geographies, with like-for-like sales in Europe and North America up four percent and developing markets up six percent, as an improving trend in India was slightly balanced by weaker performance from Latin America. Russia had a strong performance in the quarter, driven by price increases, a strong flu season and softer-than-expected slowdown in volume growth.
Commenting on the results, Reckitt’s chief executive, Rakesh Kapoor, said: “Our focused strategy is paying off and has delivered a good Q1 against a backdrop of stable developed markets and mixed emerging markets.” He added that the group’s new efficiency-and-earnings plan — Project Supercharge — announced in February, had been “fully embraced by the organisation creating a more efficient and effective RB”.
The project is intended to reduce costs and will include an unspecified number of job cuts. Operational restructuring will result in Russia and the former Soviet countries being combined with its Europe and North America business, while Latin America and Asia will merge with the Middle East and Africa.
Looking ahead, Reckitt said it remained on track to meet its full-year target of four percent like-for-like net revenue growth and to improving its margins.
Investors have reacted positively to Reckitt’s first-quarter results sending the company’s share price as much as two percent higher in early morning trading. As of 08:39 BST, the stock was changing hands at 6,045.00p – 0.83 percent up intraday. Reckitt’s share price has increased over 16 percent so far this year.
As of 09:27 BST, Friday, 24 April, Reckitt Benckiser Group Plc share price is 6,011.50p.
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