Reckitt Benckiser Group PLC said demand for its cold and the flu products was picking up as social distancing eases, helping the owner of Mucinex medicine report stronger quarterly sales and raise its guidance for the year.
The U.K.-based consumer-goods giant said Tuesday that it had seen a “sharp improvement in cold and flu sales trends” in the third quarter. The resurgence comes after demand for Reckitt’s cold and flu medicines like Mucinex and Strepsils was hit last year as Covid-19 restrictions closed schools and offices, suppressing seasonal illness.
The company said sales of its over-the-counter products rose 20%, mainly driven by Mucinex, and that its cold and flu brands had won market share. That helped outweigh lower sales of its big cleaning and disinfectant brands Lysol and Dettol, whose sales surged last year amid the pandemic, although Reckitt said trends for both brands were again improving. Overall, like-for-like sales—which strip out the impact of currency, acquisitions and divestitures—rose 3.3% in the third quarter.
Like peers Unilever PLC, Procter & Gamble Co. and Nestle SA, Reckitt said it was also grappling with higher input costs, including for paper, tin-plate and ocean freight, and had raised some selling prices in response. Higher prices, and the sale of more expensive product lines, contributed 1.7% to its growth in the quarter, with 1.6% of the growth driven by volume, or selling more products.
Like others in the consumer-products industry, Reckitt has also faced supply-chain disruptions and on Tuesday said not all of its products were delivered on schedule.
Nevertheless, the company raised its full-year guidance, forecasting like-for-like net revenue growth between 1% and 3%, up from previous guidance of like-for-like sales between flat and 2%. Despite high inflation, Reckitt retained its margin guidance, partly because its cold and flu products are typically more lucrative.
In response, shares in the London-listed company rose almost 6% in early trading Tuesday.
Analysts also said all three of Reckitt’s divisions beat expectations in the quarter. Reckitt reported a 3.6% sales rise in its health arm, which includes cold and flu products. Sales in its hygiene arm, which includes Lysol, rose 2.9% and in nutrition, which includes vitamins, they increased 3.8%.
On a reported basis, Reckitt said third-quarter sales dropped 6.8%, dragged lower by the strength of the pound against several other currencies, as well as the sale of its infant-nutrition business in China among other assets.
Write to Saabira Chaudhuri at [email protected]
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