London (Reuters) – Reckitt Benckiser, which makes cleaning products like Dettol and Lysol, raised its full-year revenue forecast on Wednesday after steep price increases helped it beat sales expectations for the second quarter.
The company said that like-for-like quarterly sales rose by 11.9% in constant currency, which was a lot more than the 6.8% growth that analysts had predicted in a poll the company gave out. Reckitt raised prices by 9.7% during the quarter, while sales went up by 2.2%.
After market leader Abbott Laboratories (NYSE:ABT) recalled dozens of brands in February, sales of its Enfamil baby formula went up by about 3.3% because there were not enough supplies in the US.
Reckitt was once the second-biggest player in the $4.8 billion-a-year U.S. baby formula market. Now, it is the biggest player and feeds about half of the country’s babies.
“It’s clear that the supply situation has helped us in terms of our overall market share,” said Laxman Narasimhan, the CEO. “When a competitor comes back online, things will get back to normal, but we have a business with the most recommended brand.”
Bernstein analyst Bruno Monteyne said, “The Abbott product withdrawal clearly boosted the numbers and was hard to predict, but the company also beat expectations in other areas, like hygiene and health.”
Shares of Reckitt went up by more than 5% when the market opened.
GUIDANCE RAISED
On Tuesday, Unilever (NYSE:UL), a competitor, also raised its full-year sales forecast after beating underlying sales forecasts for the first half of the year. This was done because the company, which makes Dove soap and Knorr stock cubes, had to raise prices to keep up with rising costs.
Reckitt stated that it now expects like-for-like net sales to increase by 5-8 percent in 2022, as well as adjusted operating margins to increase.In April, it said that net sales growth would be in the upper part of a range of 1% to 4%, and margins would be the same as last year.
“A lot of important brands, like Finish and Vanish, are growing at rates of 10 percent or more. When it comes to health, our over-the-counter (OTC) products have done well, and our intimate wellness brand is doing well, “Jeff Carr, who is in charge of money at Reckitt, said.
Reckitt’s products also include Nurofen painkillers, Durex condoms, and Strepsils cough lozenges. Since the COVID-19 pandemic began, many packaged goods companies have struggled with higher input costs.
The Ukraine-Russia conflict has made things worse by clogging up the supply chain at major ports and driving up the price of energy. This has sent the prices of key raw materials like palm oil, pulp, and plastic to record highs.