21st Oct 2014 06:26
LONDON (Alliance News) - British consumer goods giant Reckitt Benckiser Group PLC Tuesday said like-for-like sales, excluding its pharmaceuticals unit, were up 3% in the third quarter, and it reiterated its full year targets for both revenue and margin growth and said it now expects to demerge the pharmaceuticals business before the year end.
The maker of products including Strepsils cold remedy, Nurofen pain relief and Durex condoms, reported net revenue of GBP2.37 million for the third quarter, up 2% at constant exchange rates, but down 7% at actual rates. In the year-to date, revenue of GBP7.04 billion is down 7% at actual exchange rates, but up 3% at constant currency.
It said like-for-like growth including its pharmaceuticals unit was up 2% in the third quarter, although it said strong growth in Russia, Africa, Middle East and Turkey, was offset by slower markets in South East Asia and Latin America.
In the year-to-date, like-for-like sales are up 3% at constant currency, and up 4% excluding RB Pharmaceuticals, buoyed by what it said was a strong performance from its consumer health division.
However, while reporting growth in most of its divisions at constant currency, at actual exchange rates, all divisions posted declines, hit by currency fluctuations, particularly a strong British pound.
"Looking ahead, our objective remains to deliver growth which outperforms our markets, although conditions will remain challenging. I continue to expect that the strength of our brands and the quality of our innovations will deliver our full year revenue targets, at the lower end of the range of 4%-5% (ex RBP). We also reiterate our expectation of continuing margin expansion in the second half3 (ex RBP)," said Chief Executive Rakesh Kapoor in a statement.
The company also said that it expects its pharmaceuticals unit to be demerged prior to year end.
Back in July, Reckitt Benckiser announced its plans to spin-off its US-based pharmaceutical business within the next 12 months in a bid to let that division deliver long-term value as a stand-alone business, leaving the consumer goods giant to focus purely on its health and hygiene divisions. It said the de-merged unit will be listed on the London Stock Exchange.
The unit's main drug is heroin addiction treatment Suboxone, but it has started to see sales decline due to competition from generic rival treatments and pricing pressure.
Earlier this year, Reckitt posted a higher first-half pretax profit and said revenue growth in the period was held back by currency fluctuations and lower market growth in a number of countries, including weak consumer sentiment in the US.
Looking forward, the consumer goods giant said it was expecting market conditions to remain challenging in the second-half, particularly in the US and certain emerging markets.
Analysts at Barclays forecast group sales growth of 4.3% for the full year at constant currency, versus the company's guidance of between 4% to 5% excluding RB Pharmaceuticals.
"Our organic growth expectations reflect emerging markets' slowdown... we believe RB's core margin will benefit from a structurally enhanced product mix, driven by the health division," the Barclays analysts said in a recent research note.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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