Reckitt lifts sales guidance after 'strong' first half

The group said second-quarter like-for-like revenue grew 11.9% at constant currency as it lifted prices by 9.7% and as volumes rose 2.2%. Reckitt hailed strong growth across its health, nutrition and hygiene segments, with Lysol in line with expectations. Growth also included an estimated 3.3% benefit from US Nutrition, amid supply issues at its competitors.

During the quarter, Reckitt swung to an IFRS operating profit of £1.75bn from a loss of £1.83bn in the same period a year earlier.

The company said it now expects LFL net revenue growth of 5% to 8%, up from previous guidance that it would be at the upper end of a range of 1% to 4%. It also expects growth in adjusted operating margins.

Chief executive Laxman Narasimhan said: "We have delivered an excellent first half performance in 2022. Innovation and improved in-market execution are driving sustained, broad-based revenue growth and market share momentum across our portfolio. Our brands less sensitive to the impact of Covid are growing ahead of our mid-single digit target, whilst our disinfection brands are performing as expected, well above pre-pandemic levels.

"Driving our earnings model to mitigate the very challenging inflationary environment is a key focus throughout our entire organisation. Our productivity programme has delivered over £370m of savings in the first half, well ahead of our ingoing expectations. This, combined with favourable product mix and pricing, accompanied by one-off and short-term benefits, have enabled us to deliver adjusted operating profit growth in H1 well above net revenue growth."

At 1040 BST, the shares were up 4.4% at 6,652p.

Matt Britzman, equity analyst at Hargreaves Lansdown, said: "Reckitt’s resilient performance so far this year continues to impress. Price hikes were all but guaranteed given the double-digit inflation in certain costs the group’s seeing, but impressively volumes are still growing. That’s testament to the defensive nature of Reckitt’s portfolio, cleaning and hygiene products are hardly going to be the first things left off shopping lists when wallets are stretched.

"Performance from key brands Dettol and Lysol continue to support the argument that increased hygiene awareness is here to stay. Sales may be down from last years astronomical highs, but both products look to be rebasing well ahead of pre-pandemic levels.

"Reckitt’s a more streamlined outfit than it has been in the past, cost savings of £370m delivered over the first half were ahead of expectations and provided a welcome reprieve from higher input costs. The 5.1% rise in early trading tells the story, this was a solid set of results in a tough environment."