Reckitt launches £500m buyback as quarterly sales accelerate Proactive uses images sourced from Shutterstock
Reckitt Benckiser Group PLC (LSE:RKT) saw its shares climb to a four-month high after launching a new £500 million share buyback after second-quarter sales accelerated across all regions and product categories.
The maker of consumer products brands ranging from Dettol to Durex said like-for-like net revenue rose 4.7% in the second quarter, lifting first-half growth to 2.6%.
Core Reckitt like-for-like growth accelerated to 4.2% in the second quarter from 1.2% in the first. Volumes rose 2.0% and price and product mix contributed a further 2.2%.
Total group revenue fell 8.1% to £6.41 billion, mainly reflecting the disposal of its Essential Home business.
Emerging markets remained the strongest region of core growth, expanding 9.4% in the quarter. North America returned to growth with a 2.8% rise, while Europe’s decline narrowed to 1.5%.
Chief executive Kris Licht called this “broad-based acceleration”, which came alongside a programme to reduce fixed costs and create more capacity for investment.
Adjusted operating profit for the first half fell 15% to £1.5 billion, while adjusted diluted earnings per share declined 9.7% to 152.1p. Both decreases were mainly attributed to the Essential Home disposal.
Reckitt maintained its full-year guidance for 4-5% like-for-like revenue growth at its core business and an adjusted operating margin of 24.9-25.6%.
The group described higher oil-linked input costs as a “manageable headwind”, adding that the impact was now expected to be lower than previously feared.
The interim dividend was increased 5% to 88.6p per share. The new buyback will begin shortly and run for up to 12 months.
Shares rose over 7% in early trading on Wednesday, before easing to a gain of around 5%.
Analysts at Jefferies said “this is a strong update” as prior disappointing operating margin guidance for a fall of 200 basis points proved pessimistic.
LFL core growth beat expectations, with volumes up 2% compared to the consensus forecast of 0.8%.
** UPDATE: Adds share price and broker comment **