Reckitt Benckiser's share price soared more than six per cent in early trading, after the consumer goods company unveiled better-than-expected full-year results.
The FTSE 100 firm today posted a five per cent increase in sales to £8.87bn over the year, thanks to a particularly strong performance in its consumer health division, which includes brands such as Scholl, Nurofen and Gaviscon.
Adjusted earnings rose by 15 per cent at constant exchange rates to £1.87bn, while adjusted operating margin was up +210bps to 26.8 per cent.
RB's shares were up 6.5 per cent to 6,353p by mid-morning.
“FY15 results are exceptionally strong, beating consensus earnings per share expectations by seven per cent,” said Canaccord Genuity research.
“Around four per cent of this is the result of a strong operational performance, with the remainder principally being a lower than anticipated tax charge of 20 per cent.”
The consumer health unit saw a 14 per cent increase in sales, which the company attributed to a number of successful innovations over the year – including Scholl Express Pedi and electronic nail file, and Durex Invisible – a strong flu season at the beginning of the year, and a large new brand launch in the US (Amopé).
However the company remained cautious in its outlook for the division's performance: “We believe we are well placed to outperform in consumer health, but continue to emphasise that double digit growth – well above the longer term category growth rate of four to six per cent – is not sustainable.”
Chief executive Rakesh Kapoor said: “In 2016, we expect that the macro environment will be tough, but remain confident that our strategic choices across Powerbrands and Powermarkets [targeted areas of growth, namely within home, hygiene and healthcare and emerging markets] will enable RB to deliver another year of growth and margin expansion. We are targeting like-for-like net revenue growth of four to five per cent.”
Mike van Dulken, head of research at Accendo Markets, said that today's share price bounce “puts the shares back in a 2.5 year rising channel that will please the bulls, especially those looking for safer equity exposure in a tough macro environment”, but warned that there could be longer-term concerns about over-inflated prices within the sector.