Reckitt Benckiser raises sales prediction on price rises, infant formula

• Reckitt Benckiser shares rise more than 5% in after-hours trading.
• The company reported that quarterly like-for-like revenue increased 11.9 percent in constant currency.
• Sales were also boosted by Enfamil baby formula sales during a supply bottleneck.

Reckitt Benckiser (RKT.L), the maker of Dettol and Lysol cleaning products, boosted its full-year revenue prediction after exceeding second-quarter sales expectations thanks to significant price increases.

The company reported that quarterly like-for-like revenue increased 11.9 percent in constant currency, considerably exceeding the 6.8 percent gain predicted by analysts in a company-supplied survey. Reckitt increased prices by 9.7 percent in the third quarter, while sales volumes increased by 2.2 percent.

Quarterly sales were also boosted by Enfamil baby formula sales during a supply bottleneck in the United States aftermarket leader Abbott Laboratories recalled dozens of products in February.

Reckitt, which was formerly the second-largest participant in the $4.8 billion-a-year U.S. baby formula industry, has subsequently risen to the top and now feeds over half of the country’s infants.

“We’ve clearly seen the supply situation help us with regard to overall market share,” Chief Executive Laxman Narasimhan said. “We will see some normalization as a competitor comes back online, but we have a business with a brand that’s the number one recommended brand.”

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“The Abbott product withdrawal clearly boosted the numbers and was hard to forecast, but the company also beat consensus in other divisions, like hygiene and health,” Bernstein analyst Bruno Monteyne said.

Reckitt Benckiser shares rose more than 5% in early trading.

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