Household products firm Reckitt said its full-year sales would be at the upper end of previous guidance and reported better than expected quarterly sales, helped by sweeping price rises.
Reckitt and other consumer goods companies, from Procter & Gamble to Nestlé, are raising prices sharply this year, enabling them to pass record energy and supply chain cost increases on to consumers.
The higher prices, which are contributing to a global cost-of-living crisis, are denting sales volumes as many people turn to cheaper or private label products. But, so far, falling demand, has been more than offset by price increases.
Revenue Expectations
The maker of Dettol cleaning products and Durex condoms now expects like-for-like net revenue sales to grow between 6%-8% versus its previous estimate of an increase of 5%-8%, it said.
Reckitt, whose products also include Lysol cleaning products and Strepsils throat lozenges, said it continues to target growth in adjusted operating margins.
The company's third-quarter like-for-like revenue rose 7.4%, above the 6.1% growth analysts had expected in a company-supplied poll.
Sales volumes declined 4.6%. Excluding Lysol sales, which were boosted by COVID-19 this time last year, they declined 1%. Prices for the company's products rose 12% in the quarter.
Net revenue growth benefitted from the temporary uplift in demand for infant formula in the United States due to a temporary shortage, prompted by rival Abbott Laboratories recalling products in February.
Reckitt, which has held off on price increases in this category, said it estimated this benefit to have added about 3% to net revenue growth in the third quarter.
'Continue To Innovate'
“Reckitt delivered another quarter of broad-based growth amidst challenging market conditions, as we continue to innovate and improve on our in-market execution," commented Nicandro Durante, chief executive.
"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 focussed on continuing to execute on our strategic path, to deliver sustainable mid-single digit growth, and mid-20s adjusted operating margins by the mid-2020s."
News by Reuters, additional reporting by ESM. For more A-Brands news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.
