Reckitt Benckiser Says Sales to Rise at Upper End of Forecast
Reckitt Benckiser Group Plc (RB/), the maker of Durex condoms and Nurofen painkillers, said sales will rise at the upper end of its target this year after reporting second-quarter revenue that topped analysts’ estimates.
Non-pharmaceutical revenue will advance at the upper end of the 5 percent to 6 percent guidance the company had previously disclosed, the Slough, England-based company said today in a statement. Revenue on that basis, which excludes the impact of currency fluctuations, rose 6 percent in the period, faster than the 5.2 percent anticipated by analysts.
Reckitt Benckiser is looking to emerging markets such as Russia, the Middle East and Africa to compensate for slowing growth in Europe and North America, which make up about half of total revenue. The company is also grappling with declining sales at its pharmaceuticals business, which accounted for one-fifth of earnings last year.
Adjusted net income rose 6 percent to 864 million pounds ($1.3 billion) in the first half. The average estimate of eight analysts compiled by Bloomberg was 867 million pounds.
Pharmaceutical sales fell 12 percent in the second quarter at constant rates of exchange, hurt by the company’s decision to stop making tablet versions of its Suboxone opioid-dependency drug, which now faces generic competition. Reckitt Benckiser shares tumbled earlier this month when CVS Caremark Corp. (CVS) said it would remove the film version of Suboxone from its list of medications covered by insurance beginning next year.
The Suboxone business “will be under increased competitive pressure in 2014,” Seth Peterson, an analyst at Berenberg Bank, said in a note to clients last week. “When and by how much sales of Reckitt’s pharma business will decline is subject to significant conjecture.”
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