Reckitt Benckiser (RB) has topped City expectations after recording a 7% jump in like for like sales during the third quarter.
The maker of Durex and Dettol saw revenues reach £2.2bn during the quarter, easily beating analysts’ consensus expectations of a 5.2% like for like sales rise.
However, sales were down 1% on a reported basis, including a 7% hit from negative currency movements as well as disposals and discontinued operations.
The third quarter like for like growth brings its growth rate up to 6% like for like for the first nine months of the year.
As a result, Reckitt has raised its full-year revenue targets from like-for-like growth of 4.5% to 5%.
CEO Rakesh Kapoor said: “Our strategy for growth and outperformance, focused on Powermarkets and Powerbrands continues to deliver. In Q3 we achieved continued broad-based growth throughout our European and North American Powermarkets, and double-digit growth in Developing Markets. Health and Hygiene brands had an excellent quarter with +8% growth, driven by innovations and continued penetration building programmes.
“Markets remain challenging, but with 6% like-for-like growth on a year to date basis behind us, we are able to raise our full year LFL revenue target to 5%, and therefore remain poised for another year of growth and margin expansion.”
Reckitt’s shares reacted positively in early trading – climbing 2.4% to 6,289p on the back of the results.
Growth was driven by the consumer health and hygiene – up 14% and 4% on a like for like basis respectively. Consumer health was boosted by “good performances” of Nurofen, Strepsils and Durex, while hygiene saw growth led by Dettol and Harpic.
Home sales were up 5% like for like, while its portfolio brands division saw sales rise by 5% lfl thanks to improved performance in laundry detergents and fabric softeners.
Emerging markets also performed well in the quarter, climbing 10% on a like for like basis on the back of continued strong growth in China led by e-commerce. The Middle East and Turkey saw “good” growth, but conditions “remain challenging” in Brazil, South East Asia and Africa.
North American revenues were up 5% on a like-for-like basis in the quarter, while the rest of its developed markets business was up by 7% like for like but down by 8% reported because of a -14% currency impact.
Analysts at Liberum Capital reiterated its ‘buy’ stance on the stock with a price target of 6,600p. It commented: “Strong cash flow generation provides ample scope for healthy shareholder returns while providing sufficient firepower for M&A targeted at accelerating Reckitt’s push to become a global leader in consumer health”
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