Reckitt Benckiser shares soar amid strong demand for cold and flu medicines

·2-min read
A small family of a mother and young daughter being served their prescriptions a their local pharmacy in the city.
Reckitt Benckiser saw sales of over-the-counter medicines rose more than 20% during its latest quarter. Photo: Stock/Getty Images

Reckitt Benckiser (RKT.L) soared to the top of the FTSE 100 (^FTSE) on Tuesday after raising its outlook for full-year sales.

The consumer goods group, which owns household brands such as Strepsils, Nurofen, Dettol and Lysol, said strong performance was boosted by demand for cold and flu medicines, sending the stock more than 6% higher on the day.

Sales of over-the-counter medicines rose more than 20% during its latest quarter, driven mainly by Mucinex cough and cold remedies. The company said a strong cold and flu season saw sales across most of its markets come in at or above 2019 levels.

Due to this, it now expects like-for-like sales growth of between 1% and 3% this year, up from its previous guidance of between 0% and 2%. 

This however, is still far below the 11.8% sales boom it saw in 2020 when the COVID-19 pandemic led to a surge in demand for hygiene products.

Read more: Coronavirus: Dettol and Lysol owner Reckitt Benckiser sees 'exceptional growth'

In the three months to the end of September sales increased by 3.3%, beating analysts' forecasts of a 0.7% drop.

The firm added that nine out of 10 of its best-selling products had grown more than 10% over the last two years. Its health business generated more than £3bn in revenues in the year to September, while group income for the year-to-date hit £9.8bn.

“In September, we reiterated the building blocks which will see Reckitt return to mid-single digit revenue growth and mid 20’s margins,” Laxman Narasimhan, chief executive of Reckitt Benckiser, said. 

“There is more to be done, but today’s results are testament to our progress.”

However, the company warned that ongoing performance was sensitive to the ongoing health crisis, as well as cost increases. 

Reckitt saw a sharp rise in raw material costs, which rose 10% in the quarter compared to an 8-9% rise it had estimated previously.

Reckitt shares soared on Tuesday after it raised its outlook. Chart: Yahoo Finance
Reckitt shares soared on Tuesday after it raised its outlook. Chart: Yahoo Finance

Russ Mould, AJ Bell investment director, said: “There’s a lot to like in this morning’s update from Reckitt Benckiser. There is a notable hike in sales forecasts, impressively, every division has outperformed expectations and the company has maintained margin guidance despite the inflationary pressures and supply chain issues which it, like all of its peer group, are facing.

“This is testament both to the strength of its brands which have allowed the company to pass through price increases to its customers and to the ongoing transformation of the businesses under CEO Laxman Narasimhan.”

Watch: What is inflation and why is it important?

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting