Demand for Nurofen painkillers and other health brands in emerging markets helped Reckitt Benckiser offset weaker markets elsewhere to post a rise in half-year profits today.
Although a heavy flu and colds season at the beginning of 2013 boosted sales of Strepsils in Europe, the consumer giant’s fastest growth came from countries such a China, which has become the largest market in the world for its Durex brand.
Rapid growth across South East Asia and Latin America lifted overall like-for-like sales in the first six months of the year by 6% to €5.3bn. Adjusted operating profit increased 3% to €1.3bn.
Chief executive Rakesh Kapoor said the results showed a focus on health and hygiene products at the UK-based company, which also sells cleaning sprays such as Dettol as well as laundry detergents, was paying off.
He said: “Our organisational focus on 16 Powermarkets, such as China, is another critical element of our growth strategy and is enabling us to sustainably outperform our markets.”
However, he admitted it continues to face challenging market conditions, with Europe only reporting stable results under a weak economic backdrop.
In the US, a decision by healthcare provider CVS CareMark to drop the dissolvable version of Suboxone, Reckitt’s heroin addiction drug, has worried some analysts that other firms could follow suit.
Keith Bowman, an equity analyst at Hargreaves Lansdown, said there were concerns for generic competition hitting the group’s pharmaceuticals business, which represented about a fifth of last year’s operating profit.
“Competitors are also targeting emerging market growth, whilst a 30% plus gain in the share price over the last year has raised some valuation question marks,” he cautioned.
Reckitt was bullish on its prospects, with Mr Kapoor saying there continues to be strong patient and doctor preference for film over the tablet version of Suboxone. He said the film version has maintained its 69% share of the market.
The company raised its full-year sales forecasts to the upper end of its previous five to six per cent growth guidance.