24th Apr 2024 11:10
(Alliance News) - Reckitt Benckiser Group PLC delivered an "impressive beat," in the first quarter, with every division doing "better than consensus," analysts at Barclays said on Wednesday.
Shares in Reckitt Benckiser rose 4.6% to 4,445.00 pence in London on Wednesday. It was the best performing stock in the FTSE 100 which was up 0.6%.
The Slough, England-based consumer goods maker reported a strong start to 2024 for its Hygiene business, offsetting a significant decline in Nutrition and allowing the company to maintain its guidance for annual revenue and profit growth.
Reckitt reported 1.5% net revenue growth on a like-for-like basis in the first quarter of 2024 from a year before. This was composed of a 0.5% decline in volume that was more than offset by a 2.0% increase from pricing and sales mix.
Within this, the Hygiene business recorded the stand-out revenue performance, with 7.1% like-for-like growth, thanks to a 2.9% rise in volume and a 4.2% benefit from price and mix.
By contrast, the Nutrition division suffered a 9.9% decline in like-for-like net revenue, almost entirely the result of lower volume, which was down 9.4%. Reckitt said the lower Nutrition revenue was the result of temporary market share gains due to competitor supply issues falling away.
The Health division was more stable, with 1.0% like-for-like growth in the first quarter, thanks to a 1.1% benefit from price and mix.
"We have delivered a good first quarter," said Chief Executive Officer Kris Licht. "Following a period of price-led growth, we are now returning to a more balanced contribution from price, mix and volume. We grew volumes in many of our 'powerbrands' in the quarter, including Lysol, Dettol, Durex and Finish, as well as our non-seasonal [over-the-counter] portfolio."
Barclays said the 1% underlying volume growth in Hygiene, and flat volumes in Health are especially notable, while Nutrition looks to have finally stabilised in the US.
"There is no update on litigation, which is likely to be the dominant share price issue for some months to come, but this is a welcome operational beat after some disappointing recent quarters," the broker added.
In March, Reckitt said it would pursue all options to have a USD60 million verdict overturned in a lawsuit related to its Enfamil baby formula in the US. Reckitt said it stood by the safety of all its products.
Barclays said Hygiene was the standout performer, with organic sales growth coming in around 3% above consensus.
Encouragingly volume growth here was robust (2.9%) and positive, Barclays remarked, with Lysol and Finish notably strong.
Health had flat volumes with Durex, Dettol, and VMS strength offsetting tough flu comps. Nutrition was significantly better than and consensus and crucially market share has now stabilised sequentially, Barclays said.
Barclays reiterated an 'overweight' rating on Reckitt.
By Jeremy Cutler, Alliance News reporter
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