British household cleaning products group Reckitt Benckiser on Monday gave an upbeat second-half outlook as it matched top-end forecasts with an 11 percent rise in second-quarter profits sending its shares up. The maker of Cillit Bang cleaner, Finish/Calgonit dishwasher products and Lysol disinfectants said it had seen no sign of consumers moving to cheaper products.
While rising commodity costs, especially oil, had been offset by its own action. "Trading down has not happened, while price rises together with our cost cuts are more than enough to offset rising commodity costs," Chief Executive Bart Becht said in a results conference call.
With second-quarter revenue and profit growing 11 percent, Becht expects the group to at least match its 10-11 percent annual revenue growth target and was on track to meet its 11 percent net profit growth goal, both at constant exchanges. Reckitt shares rose 2.6 percent to 26.01 pounds by 1415 GMT after hitting 26.40 pounds, reflecting its confidence after sector nervousness caused by French cosmetics group L'Oreal cutting its year growth outlook earlier this month.
Analysts say consumer goods stocks have been rocked by input cost pressures and the risk of downtrading, but Reckitt has managed the first well by cost cuts and price rises, and the latter by maintaining a track record in innovation. "Reckitt continues to outperform operationally; in a quarter where there were several reasons why Reckitt could have shown weakness, both top line and earnings growth once again exceeded expectations," said analyst Michael Steib at Morgan Stanley.
The group, which also makes Lemsip cold remedies and Strepsils throat lozenges, posted adjusted net profit for the April-June quarter of 240 million pounds ($476.4 million), at the top of a forecast range from 229 million to 240 million and compared to an average of 235 million pounds.