Reckitt Benckiser beats expectations thanks to bumper sales of healthcare brands

Guy Bentley
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Chief executive Rakesh Kapoor said the company's new strategy is "paying off" (Source: Getty)

The figures

Consumer goods giant Reckitt Benckiser (RB) has reported a five per cent rise in like-for-like sales, which hit £2.2bn during the first quarter. Health and hygiene enjoyed strong growth, with net revenue rising by 32 per cent and 42 per cent respectively in those categories.

Why it's interesting

A bad flu season (bad meaning good, in RB's case) led to a good performance from consumer brands such as Nurofen, Gaviscon and Strepsils. It had a tough time last year, facing intense competition from supermarkets selling less expensive own-brand healthcare products.

The company is in the early stages of implementing "Project Supercharge", which is intended cut costs. As expected, the company confirmed it will result in job losses but it is not clear how many. Operations will be restructured, with Russia and the former Soviet countries to be combined with its European and North America business, while Latin America and Asia will merge with the Middle East and Africa.

What Reckitt Benckiser said

Commenting on the results, chief executive Rakesh Kapoor said:

Our focused strategy is paying off and has delivered a good first quarter against a backdrop of stable developed markets and mixed emerging markets. A strong and broad-based performance from our consumer health brands continues to deliver growth and outperformance, aided by a strong flu season. In hygiene, Dettol, Lysol and Harpic performed well offset elsewhere by tough market conditions.

In short

RB will be pleased with a better than the 3.9 per cent forecast for the first quarter, but it remains to be seen whether Project Supercharge will reap the sort of savings the company is hoping for. The company's trading update forecast it will meet its like for like revenue growth target of four per cent.

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