Reckitt Benckiser Sales Beat Estimates on Cold Remedies

Reckitt Benckiser Group Plc, the maker of Mucinex, reported estimate-beating first-quarter revenue growth on better-than-expected sales of flu remedies in the U.S.

Sales rose 5 percent, excluding acquisitions, disposals and currency shifts, the Slough, England-based company said in a statement Friday. The average estimate of eight analysts surveyed by Bloomberg was for a 3.9 percent gain. The health unit, which includes Mucinex and Nurofen painkillers, boosted sales 13 percent, exceeding analyst estimates.

“The main point of note is the exceptionally strong performance in health,” Jeff Stent, an analyst at Exane BNP Paribas, said in a note.

Reckitt Benckiser, which now goes by the corporate moniker RB, rose 1.4 percent to 6,083 pence at 8:12 a.m. in London, extending its gain this year to 16 percent.

Chief Executive Officer Rakesh Kapoor, faced with slowing growth in emerging markets such as Brazil, plans to cut costs by as much as 150 million pounds ($225 million) a year to widen profit margins. The program will include an unspecified number of job cuts and reductions in travel budgets, forcing even Kapoor to travel coach on flights under six hours.

“A strong and broad-based performance from our consumer health brands continues to deliver growth and outperformance, aided by a strong flu season,” Kapoor said in the statement. The company also reaffirmed its full-year sales and profit margin forecast.

Flu Outbreak

In the U.S., the rate of influenza-associated hospitalizations between October and April was 62.4 per 100,000 people, almost double the 32.8 rate of last year’s flu season, according to the Centers for Disease Control.

Total first-quarter revenue rose 1 percent to 2.2 billion pounds, matching the analyst consensus. Despite the beat, sales in the company’s homecare unit, which includes Air Wick air fresheners, declined 1 percent. Analysts at brokerages including Morgan Stanley have said that the company should divest the unit, which accounts for about one-fifth of revenue.

Kapoor spun off RB’s prescription-drug business in December into a new company called Indivior Plc to focus on consumer-health brands such as Durex condoms. The company this week recalled about 1.5 million bottles of Mucinex after some were found to be mislabeled, and just received a setback to its acquisition of K-Y sexual lubricants when New Zealand regulators declined to approve the deal in that country.

“We have received and accept the decision,” spokeswoman Patty O’Hayer said by e-mail. “In New Zealand, we will continue to offer Durex brand products.”

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