The share price of FTSE 100 consumer products company Reckitt Benckiser has inched up today after the company reported forecast beating sales figures spurred by sales of disinfectants such as its Dettol and Lysol brands. Like-for-like sales at the company rose by 11.9% over the six months to the end of June, prompting the company to raise its full-year forecasts and announce an interim dividend.
The results mirror those of rival Unilever, announced last week, which also saw declines in sales of other products compensated for by a surge in demand for cleaning and personal hygiene lines. As well as bottles of disinfectants like Dettol flying off the shelves, cleaning products such as Cillit Bang and Finish saw like-for-like sales in its hygiene division climb 16.1%. Its health division, including brands such as Nurofen painkillers and Mucinex cough syrup, was up 9.3%.
Reckitt’s nascent online business also benefited with e-commerce sales up 60%, accounting for 12% of its half-year group revenue. A new professional services unit offering hygiene services to clients such as Hilton Hotels, car rental giant Avis and Delta Airlines was also said to be “developing fast”.
The net result has been a 14% lift to operating profit, which came in at £1.6 billion on a constant currency measurement. The first quarter of the year was especially positive for Reckitt, and was the best growth the company has seen for a quarter since it was formed in 1999 through the merger of the UK’s Reckitt & Coleman and Benckiser from the Netherlands. The second quarter achieved sales growth of 10.5%, which was again ahead of analyst forecasts.
The company now expects annual revenue, earnings and margins figures to come in ahead of its own forward guidance “notwithstanding a cautious outlook for the balance of 2020 and an uncertain macro-economic environment”.
Based in Slough, Reckitt has operations in over 60 countries and employs more than 40,000. The company announced costs directly related to the Covid-19 pandemic have come in at £69 million. They were incurred by extra expenses such as creating temporary social distancing infrastructure, increasing short term capacity and adding freight and warehousing costs to keep up with online demand. The company added:
“These estimated costs are incremental to our planned investments and we expect them to continue in the foreseeable future.”