27th Jul 2018 09:01
LONDON (Alliance News) - Reckitt Benckiser Group PLC on Friday lifted its annual guidance after profit rose in the first half of 2018, helped by strong performance in RB Health division and acquisition of the US's Mead Johnson Nutrition.
The stock was trading 7.6% higher early on Friday at 6,790.00 pence per share.
The consumer goods & personal care giant - which makes products including Nurofen painkillers and Air Wick air freshener - said pretax profit in the six months to the end of June grew to GBP1.11 billion from GBP1.02 billion a year before, as net revenue rose 23% to GBP6.14 billion from GBP5.02 billion, benefiting from the Mead Johnson Nutrition acquisition last year.
On a like-for-like basis, revenue was 3% higher year-on-year, while on the pro-forma basis it grew by 4%. Pro-forma growth excludes the impact of changes in exchange rates, acquisitions, disposals and discontinued operations.
Reckitt will pay an interim dividend of 70.5p, up 5.9% from 66.6p a year before.
The company said the new structure, people and operating model of the company's proposed two separate divisions - RB Health and RB Hygiene Home - have been in place since January.
Reckitt said revenue in its Health unit rose 4% on a pro-forma basis to GBP3.80 billion, driven by strong performance in the Infant Formula & Child Nutrition business, which experienced strong category growth above Reckitt's medium-term expectations.
The Health division also benefited from the infant nutrition Enfamil NeuroPro launch and expanded distribution in mother and baby stores. In June last year, Reckitt bought US baby food maker Mead Johnson Nutrition for GBP13.2 billion, adding this to the Health division. As a result the company said it booked GBP450 million of integration costs.
The rest of Health unit saw good broad-based growth across the majority of brands, Reckitt said.
Meanwhile, the Hygiene segment also rose by 4% on a pro-forma basis, generating revenue of GBP2.34 billion. The result was helped by strong performance in North America, while Europe saw weaker growth, hit by pricing pressure, the company said. In the US, Lysol cleaning product was the main growth driver due to a seasonal benefit in the first quarter of 2018.
As a result, Reckitt raised its full-year expectations and now estimates to grow revenue, on a constant currency basis, in a range of 14% to 15% year-on-year, accelerating from between 13% and 14% forecasted earlier. It also forecast like-for-like revenue growth at the upper end of a 2% to 3% range.
"Delivering growth and the successful integration of Mead Johnson Nutrition remain our key priorities," said Chief Executive Rakesh Kapoor.
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