Reckitt Benckiser Rises to Record on Boost to Sales Guidanceby
Reckitt Benckiser Group Plc shares rose to a record after the maker of Durex condoms reported quarterly revenue growth that beat estimates and raised its full-year target.
Third-quarter like-for-like sales climbed 7 percent, the most since the first quarter 2009, the Slough, England-based company said in a statement Wednesday. The median estimate of 15 analysts surveyed by Bloomberg was for a 5.2 percent gain. Revenue in the company’s health unit, which includes Nurofen painkillers and Strepsils throat soothers, rose 14 percent, beating estimates.
“While the market had one optimistic eye on a 6, no one was thinking of the lofty heights of 7,” Jeff Stent, an analyst at Exane BNP Paribas, said in a note.
Reckitt Benckiser forecast a 5 percent gain in revenue for the year, up from an earlier forecast of 4 percent to 5 percent. Sales in the health division, which accounts for a third of the total, have grown at four times the speed of the company’s other units so far this year. The business, which includes brands such as Scholl and Durex, has benefited from new releases such as electric foot-grooming products and thinner condoms.
Reckitt Benckiser shares rose 2 percent to 6,267 pence at 12:34 p.m. in London, after touching a record price of 6,325 pence.
The health division won’t always show such rapid growth, Chief Executive Officer Rakesh Kapoor said on a conference call. “I don’t think we can play this music every quarter,” he said.
Revenue for the first nine months of the financial year rose 6 percent on a like-for-like basis to 2.2 billion pounds. The figures exclude acquisitions, disposals and currency shifts.
“It’s very difficult to be churlish about this,” Martin Deboo, an analyst at Jefferies with a buy recommendation on Reckitt Benckiser, said by phone. “What I like is that the growth is broadly based even in developed markets.”