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Reckitt Benckiser and Danone have continued the trend of stronger-than-expected sales growth from big consumer groups fuelled by hefty price rises.
It follows Unilever, Coca-Cola, Mondelez and Lindt all reporting double-digit rises in organic revenue growth yesterday.
This morning, Danone revealed a 12.6% jump in sales to €13.3bn in the first half - 7.4% on a like-for-like basis - with a 6.1% contribution from higher prices and 1.3% from volumes and product mix. It’s like-for-like sales in the second quarter increased 7.7%, with prices up 6.8%.
Dettol to Durex supplier Reckitt Benckiser enjoyed an 8.6% rise in like-for-like revenues to £6.9bn in the first half, driven by a 1.2% rise in volumes and 7.4% in price hikes, while 11.9% like-for-like growth in Q2 saw prices up by 9.7%.
Danone, which is in the midst of a turnaround plan, said it experienced good momentum across its categories and geographies, with coffee creamers, yogurts and plant-based driving the performance in North America and its baby formula products and water brands helping European growth.
The French group’s operating profits were up 0.5% to €1.6bn on a like-for-like basis in the half.
CEO Antoine de Saint-Affrique said the group now expected like-for-like sales growth for the year of 5% to 6%.
“This is only the start of our ‘Renew’ journey: we believe there is still much we can do to bring Danone where we want it to be and deliver on both our purpose and our business ambition.”
Reckitt pointed to double-digit growth from the 70% of its portfolio less sensitive to “Covid dynamics” in the second quarter, with the likes of Lysol and Dettol struggling to match its pandemic performance.
Following the strong first-half results, Reckitt also lifted its full-year expectations to 5% to 8%, up from 1% to 4% previously.
CEO Laxman Narasimhan said: “We have built a stronger, more resilient business around our portfolio of trusted brands in growth categories. Despite challenging conditions, we are confident about the rest of the year, we are already delivering sustainable mid-single digit net revenue growth, and remain firmly on track to deliver our medium-term adjusted operating margin goal.”
Shares in Reckitt shot up 6.2% to 6,772p this morning, while Danone rose 2.7% to €56.44.
Morning update
Haleon, the consumer health arm spun out of GSK and listed on the FTSE 100 and New York Stock Exchange this month, has made a strong debut on the markets with its maiden results.
A trading update for the six months to 30 June, showed revenues up 13.4% to £5.2bn, with organic growth of 11.6%, made up of a 3.7% rise in prices and 7.9% from volumes and mix.
The group said its performance was powered by a strong showing from its brands, with Panadol, Theraflu, Otrivin, Advil and Centrum particularly strong as the return of a cold and flu season added 4% to organic growth.
Organic growth for the year is now expected to come in at 6% to 8%.
CEO Brian McNamara said the strong growth continued the positive momentum seen since the start of year.
“This reflects the strength of our portfolio, continued innovation and excellent commercial execution across our markets,” he added.
Shares in Haleon jumped 1.9% to 314.6p, but remained below the listing price of 330p.
Food prices have hit a 13-year high as spiralling production costs piled more pressure on the grocery sector, according to the latest industry data.
The rises on supermarket shelves contributed to a jump in overall shop price inflation, across food and non-food, to 4.4% in July, up from 3.1% in the prior month and the highest rate on record since the BRC-NielsenIQ index began in 2005.
Food inflation strongly accelerated to 7% this month, the highest level since May 2009 and up from 5.6% in June.
Fresh food soared to 8%, compared to 6.2% last month, driven by big jumps in prices of dairy items such as butter, lard and cooking fats.
Ambient moved up from 4.8% higher in June to 5.7% in July – the fastest pace of increase since April 2012.
BRC chief executive Helen Dickinson said households and businesses should prepare for a difficult period as inflationary pressures hit home despite retailers trying to absorb as much as possible.
Mike Watkins, head of retailer and business insight at NielsenIQ, added: “The grocery industry in particular is under intense pressure as retailers try to shield customers from the full impact of inflation. At the same time there has been an increase in competitive intensity so customer retention over the summer holiday season will be key to help stem any further fall in volumes.”
Vimto maker Nichols has increased revenues by 19.1% to £80.2m in the first half of the year thanks to the continued recovery in the out-of-home market.
It helped pre-tax profits rise 17% to £10.1m, with EBITDA up 10.6% to £12.4m.
UK revenues jumped 29.3% to £62.6m as the out-of-home division bounced back from the pandemic with a sales increase of 131.9%.
Nichols said its Vimto brand also continued to outperform the rest of the dilutes markets, with value up 5.7%.
However, international sales fell back 7.2% to £17.6m as shipments to the Middle East were disrupted.
Non-executive chairman John Nichols said: “Whilst the group is not immune to the significant and accelerating inflationary pressures impacting the consumer and the soft drinks market, we have taken swift mitigating actions where possible and adjusted pre-tax profit expectations for the full year remain unchanged.
“The board remains mindful of the potential earnings impact of continued inflation into FY23 and beyond. We have a long-term track record of growth, a proven, diversified strategy, and a quality range of brands.”
Cadbury owner Mondelez International reported its Q2 results overnight, with organic revenues up 13.1% to $7.3bn thanks to price increases.
The group revealed a 10% increase to its quarterly dividend and raised its organic growth outlook for the year to 8%.
CEO Dirk Van de Put said the second quarter and first half were marked by strong top and bottom-line performance across all regions and categories.
“Our chocolate and biscuit businesses continue to demonstrate strong volume growth and pricing resilience across both developed and emerging markets. These results combined with ongoing cost discipline, simplification and revenue growth management are delivering robust profit dollar growth and strong cashflow, enabling us to increase our dividend by 10%,” he added.
French spirits group Rémy Cointreau also reported a big jump in sales thanks to rising prices, with revenues in the first quarter up 27% on an organic basis to €409.9m.
It highlighted a 14.5% increase in average prices and a 12.5% rise in volumes.
Rémy added all brands contributed to the performance as trading recovered in China following stiff lockdown measures, along with the continued recovery in the EMEA region and an “excellent dynamic” in the US.
A better-than-expected take up of cigarette alternatives has boosted first-half revenues at British American Tobacco by 3.7% to £12.9bn.
The group reported an additional 2.1 million consumers for its non-combustible products, taking the total to 20.4 million.
Revenues from new categories rose 45.4% in the half to £1.3bn, while sales of its vapour range increased 48%.
Sales of cigarettes nudged up 0.6% as higher prices made up for falling volumes.
However, profits fell 25% to £3.7bn as the group took a hit of £957m following its exit from the Russian market.
CEO Jack Bowles said BAT was delivering strong operational performance and transforming the business, and he hailed passing the 20 million consumer milestone for its non-combustible brands.
“We are not immune, of course, to the increasing macro-economic pressures, exacerbated by the conflict in Ukraine,” he added. “However, we are well positioned to navigate the current turbulent environment due to our powerful brands, operational agility and continued strong cash generation.”
Embattled DTC ready meal firm Parsley Box has reduced its adjusted EBITDA loss by 42% to £2.1m in the first half, but revenues fell more than 30% to £9.6m.
Sales from new customers declined from £3m a year ago to just £900k, while repeat sales also fell from £11m to £8.7m.
However, average order value rose 25% to £45 and the company reduced its marketing spend to and overheads to conserve cash.
Total order numbers in the first half were 212,000, down from 385,000 a year ago. As a result, the group now expects full-year revenue of £19m.
The full-year adjusted EBITDA is expected to remain broadly in line with expectations at a loss of £4.1m.
CEO Kevin Dorren said: “We have continued our product innovation at pace to increase the opportunities for customers to order from us, and remain focused on balancing investment in customer acquisition and maintaining cash reserves, whilst we navigate the challenging consumer environment.”
He added: “We remain well funded and continue to deliver quality, good value, and nutritious food.”
The FTSE 100 is up 0.4% to 7,338.1p this morning.
Of the companies reporting results, Nichols slumped 4.2% to 1,265p, BAT fell 0.3% to 3,461p and Parsley Box plummeted 26.4% to just 12.9p, a long way from its 200p IPO issue price.
Elsewhere, risers included DS Smith (+3.5%), Fever-Tree (+3%) and Ocado (+2.4%), while losers included Bakkavor (-2.1%), McBride (-1.8%) and Marston’s (1.1%), which reported a 2% fall in like-for-like sales in a trading update for the 42 weeks to 23 July.
Yesterday in the City
The FTSE 100 beat a retreat yesterday to end the day flat at 7,306.28pts.
Shares in THG plunged further yesterday as the beleaguered ecommerce group revealed it had ended a $1.6bn investment agreement with Japanese multinational SoftBank. Its shares fell 5.1% to a new all-time low of 66.4p.
Investors were soothed by organic growth of 8% at Unilever in the first half as the CPG group pushed through price increases. Shares in the group leapt 3% higher to 4,032p.
Greencore went in the opposite direction after its Q3 update despite the sandwich maker posting strong year-on-year growth. The stock fell 3.1% to 104p.
Compass Group finished up 2.8% to 1,896.1p as the recovery for hospitality and catering continued to gather pace.
Elsewhere, risers included Bakkavor (+4.2%), Devro (+3.9%) and Nichols (+3.5%).
Fallers included Deliveroo, down 10.6% to 85.5p, B&M, down 2.2% to 411.8p, and Fever-Tree, down 4.9% to 1,024.7p.
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