Reckitt Benckiser (RKT.L) fell more than 3% on Wednesday despite raising the lower limit of its sales growth target for the year.
The consumer goods company, which owns brands such as Dettol, Durex and Strepsils, saw its sales increase during the period thanks to higher prices and increased demand for baby food in the United States in due to a temporary shortage.
Product prices rose 12% in its latest quarter, but some customers continued to switch to more expensive products. He expects inflation on the cost of goods sold to remain in the 1920s, he said.
It now also expects like-for-like sales growth of between 6% and 8% for 2022, down from a previous range of 5% and 8%.
Third-quarter like-for-like revenue rose 7.4%, above the 6.1% growth analysts expected in a survey provided by the company.
However, volumes declined slightly as rising inflation took its toll. This affected spending on consumer goods. Excluding Lysol sales, which were boosted by COVID-19 at the same time last year, they were down 1%.
In healthcare, sales climbed 10.7%, driven by over-the-counter brands such as Mucinex, Nurofen and Strepsils, and the company’s intimate wellness portfolio Durex and KY.
At the same time, like-for-like growth in Nutrition increased 24.7%, driven by mid-single-digit growth in developing markets.
“Reckitt delivered another quarter of broad-based growth in challenging market conditions as we continue to innovate and improve our market execution,” said Nicando Durante, Chief Executive Officer.
“We have an excellent portfolio of trusted, market-leading brands in high-margin, high-growth categories and a strong culture of ownership and delivery. My priority is firmly focused on continuing to execute on our strategic trajectory. , to deliver sustainable mid-range residences 10-digit growth and mid-20s adjusted operating margins by the mid-2020s.”
Reckitt added that he expects higher levels of investment in the second half of the year, compared to the first six months. He believes he will face a tougher inflationary environment as favorable first-half hedge positions are rolled over at higher rates.
Adam Vettese, analyst at social investment network eToro, said: “The anticipation of inflation remaining in the ‘high teens’ for its products through the end of the year is alarming for consumers already facing food price inflation of over 14% in the UK.
“Consumer essentials are a good place for business right now, but there will likely be a breaking point at which consumers start to cut back on even essential items. The challenge for Reckitt then is to face the cost of living crisis and make it to the other side without losing the custom.
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