Reckitt Benckiser Second Quarter ‘Better Than Expected’

The group, which also makes household products such as Cillit Bang, Calgon and Finish, said a “favourable flu season” fuelled a 5% rise in net revenue in the six months to June 30. Sales in that unit – which accounts for one-third of revenue – rose 13 percent, the second straight period of double-digit gains.

The firm is trying to boost its presence in consumer health.

“We are now targeting full year [like-for-like] net revenue growth of 4%-5% and [second-half] moderate to “nice” adjusted operating margin expansion, following the 160 basis points [margin expansion] achieved in [the first half]”, said Chief Executive Rakesh Kapoor. It comes as demand for over-the-counter health products continues to grow as the ageing population becomes more health aware.

First-half adjusted net income rose 9 percent excluding currency effects to 720 million pounds, ahead of analysts’ estimates. Free cash flow generation was 756 million pounds.

“While we are seeing improved consumer sentiment in a number of countries, such as India, other geographies, such as Brazil and Indonesia, remain challenging”, he told reporters. The company said it now expects full-year growth of as much as 5 percent, up from its earlier forecast of 4 percent.

It was previously forecasting 4 percent like-for-like sales growth.

Kapoor, approaching his fourth anniversary as CEO, plans to cut costs by as much as 150 million pounds ($225 million) a year to widen profit margins.

Shares in RB were up 138 pence at 6,051 pence at 0902 GMT, valuing the business at 43.3 billion pounds. Analysts at Liberum Capital have a “buy” recommendation and a 6550p target price on Reckitt.

They estimate RB will generate 5 billion pounds in free cash flow over five years.

Further, the Board declared an interim dividend of 50.3p per share, compared to last year’s 60 pence- prior to Indivior demerger.