Reckitt Benckiser Raises 2015 Sales Forecast on Health Gains

By Steve Wynne-Jones
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Reckitt Benckiser Raises 2015 Sales Forecast on Health Gains

Reckitt Benckiser Group Plc, the maker of Dettol disinfectants, raised its full-year growth target after new consumer health products helped second-quarter revenue growth beat estimates.

Sales rose 5 percent, excluding acquisitions, disposals and currency shifts, the Slough, England-based company said in a statement Monday. Analysts expected a 4.4 percent gain, according to the median estimate in a Bloomberg survey. The company forecast full-year growth of as much as 5 percent, up from an earlier prediction of 4 percent. The shares rose as much as 2.9 percent in early London trading.

“There’s not a lot wrong with this in our view,” RBC Europe analyst James Edwardes Jones said in a note. “This is an excellent set of results.”

Chief Executive Officer Rakesh Kapoor said Monday he expects to reach the upper end of his goal to cut costs by as much as 150 million pounds ($225 million) a year to widen profit margins. He’s also coping with uneven market conditions by shifting the company’s focus to more profitable consumer-health products, such as Mucinex cold remedies and Durex condoms. Sales in that unit -- which accounts for one-third of revenue -- rose 13 percent, the second straight period of double-digit gains.

Velvet Express


The first-half operating profit margin widened by 1.6 percentage points to 21.9 percent, helped by the cost savings and the introduction of new products like Amope Velvet Express Pedi and Durex Real Feel condoms. The company said it expects “moderate to nice” margin expansion in the back half of the year.

The results were “encouraging, with Reckitt continuing to deliver improvements to its sector-leading margins both on the gross level from mix and overhead cost saves while like-for-like momentum is also strong going into the second half,” Berenberg analyst Fintan Ryan said in a note.

First-half adjusted net income rose 9 percent excluding currency effects to 720 million pounds, ahead of analysts’ estimates.

“Given our strong half-year performance, and accelerated delivery of Project Supercharge savings, we now expect to exceed the targets we set at the beginning of the year,” CEO Kapoor said in the statement.

Bloomberg News, edited by ESM

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