Reckitt Benckiser Group on Tuesday raised its full-year forecast after reporting higher-than-expected third-quarter sales, driven by price hikes and a spurt in demand for Mucinex cold and flu remedies as well as for sexual wellness products.
The Lysol cleaning products maker reported a surprise 3.3% rise in like-for-like sales for the third quarter, beating the 0.7% decline analysts had expected, according to a company-supplied consensus.
The reported number and estimates excluded sales from its recently completed sale of its infant nutrition business in China.
The company also raised its full-year net revenue like-for-like sales growth forecast to 1-3% from flat to up 2% earlier, but cautioned that growth would be "softer" in the fourth quarter.
Reckitt said it was seeing a 10% rise in raw material prices, compared with an 8-9% rise it had estimated previously. It cited challenges particularly in areas such as surfactants, paper and tinplate due to a surge in costs.
However, the FTSE-listed company kept its adjusted operating profit margin forecast, excluding IFCN China, for the year in the range of 22.7% to 23.2%.
On the 27 July, Reckitt Benckiser Group posted disappointing second-quarter sales growth and warned on margins on Tuesday sending its shares 9% lower as costs rise and easing lockdowns slow growth in products such as Lysol disinfectants.
Like-for-like sales rose 2.2% for the three months to 30 June, excluding its infant nutrition business in China, lower than the 2.3% growth analysts had expected, according to a company-supplied consensus.
The stock, down 5% this year, was the top loser on the FTSE 100 index in morning trading.
The pandemic boosted Reckitt's sales to record levels last year, but there are signs that momentum is easing as vaccinations gather pace and stay-at-home restrictions in developed economies are lifted.