Reckitt Benckiser gains after posting rise in first-half profit

Shares in consumer goods company Reckitt Benckiser rose after it raised its like-for-like revenue growth target for the full year, as it posted a jump in first-half pre-tax profit amid broad-based growth across its businesses..

Pre-tax profit for the six months ended 30 June came in at £912m from £838m in the same period last year, on net revenue of £4.36bn, up 4% from 2014. Like-for-like revenue growth at constant currencies was 5%, ahead of analysts’ expectations for a gain of around 3.6%.

Chief executive Rakesh Kapoor said: “I am pleased with our first half results, they once again confirm that our strategic focus on consumer health and hygiene is delivering sustainable growth and outperformance. We continue to invest behind our innovations such as Scholl Express Pedi and Durex Real Feel in both developed and developing markets leading to broad-based growth across both areas.

“Given our strong half-year performance, and accelerated delivery of Project Supercharge savings, we now expect to exceed the targets we set at the beginning of the year.”

The company is now targeting full-year like-for-like net revenue growth of 4-5%.

Reckitt declared an interim dividend of 50.3p per share, in line with its 50% payout ratio policy but lower than last year’s 60p.

“Reckitt Benckiser’s first-half results provided further evidence of the superior resilience and medium term potential of the company’s business model,” said Nomura.

It added: “We continue to view RB as the most compelling transformational story in the European consumer sector, with the company gradually shifting its centre of gravity away from Home Care towards Consumer Healthcare via a combination of strong organic sales growth in Health and acquisitions.”

It added that with stronger-than-expected development in Developing Markets in the second quarter and Supercharge savings being delivered ahead of schedule, consensus estimates are likely to be increased by 2-3%.

Nomura rates the stock at ‘buy’ with a 6,100p price target.

RBC Capital Markets, meanwhile, said Reckitt bettered consensus expectations for LFL revenue growth, EBIT margin and EPS.

“This is an excellent set of results,” it said, adding, however, that it was keeping its ‘sector perform’ recommendation in light of the shares' punchy valuation.

At 14:40, shares were up 2.3% at 6,045p.