Reckitt Benckiser shares jumped on Wednesday after the consumer goods giant’s sales surpassed forecasts, following solid first-quarter demand for its cleaning products.
The group, whose brands include Lemsip and Nurofen, reported that like-for-like net turnover growth of 1.5 per cent for the first three months of 2024, beating analyst forecasts of 0.9 per cent.
Growth was primarily driven by its hygiene business, which saw revenues expand by 7.1 per cent, thanks to higher sales of dishwasher detergent Finish and disinfectant brand Lysol.
Better than forecast: Reckitt Benckiser, whose brands include Lemsip and Nurofen, reported that like-for-like net turnover rose by 1.5 per cent in the first three months of 2024
Reckitt was also boosted by increasing sales in Europe, and developing markets like China and South Asia, as well as rising volumes of Durex, Dettol, and non-seasonal over-the-counter brands in its health division.
This offset weaker trade in its nutrition arm resulting from Abbott Laboratories, a major US competitor, resolving supply chain issues related to baby formula production.
When measuring foreign exchange fluctuations, the Slough-based company’s first-quarter turnover declined by 4.6 per cent to £3.74billion.
Reckitt Benckiser Group shares jumped 4.5 per cent to £44.41 by lunchtime on Wednesday, making them the FTSE 100 Index’s second-biggest riser.
However, the shares have still shrunk by around a quarter in the past six months because of compliance issues in two Middle Eastern markets and controversy over its baby formula products.
Last month, the firm was ordered by a US court to pay $60million (£47million) to a mother who said her premature baby died after consuming Enfamil baby formula.
Reckitt rejected the verdict and has vowed to continue selling Enfamil, which is made by Mead Johnson, a company it acquired in 2017 for $17.9billion.
Mead Johnson has also said it plans to appeal the decision.
Enfamil’s sales shot up in 2022 when Abbott was forced to shut down its Michigan plant owing to flooding and the discovery of bacteria, leading to a baby formula shortage in America.
Reckitt was subsequently cleared by the US Government to import its formula from its manufacturing facilities in Mexico and Singapore.
Kris Licht, chief executive of Reckitt Benckiser, said: ‘We are well placed to deliver value creation by leveraging our strong portfolio of brands through investment and innovation.
‘This drives our continued strong free cash flow generation, our accelerated share buyback programme, and increased cash returns to shareholders.’
For 2024, Reckitt expects like-for-like net revenue to expand by 2 to 4 per cent, while adjusted operating profits are set to ‘grow ahead’ of turnover.
