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Severe U.S. flu season helps Reckitt top forecasts

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(Globalpost/GlobalPost)

By Rosalba O'Brien

LONDON (Reuters) - A severe U.S. cold and flu season helped Reckitt Benckiser <RB.L>, the maker of Strepsils lozenges and Mucinex decongestant, to beat first-quarter revenue expectations.

The consumer health and hygiene group said on Monday net revenues rose 7 percent to 2.52 billion pounds ($3.8 billion) in the three months ended March, compared with analysts' average forecast of 2.47 billion, according to Thomson Reuters data.

An intense North American flu season has pushed up demand for hospitals, pharmacies and makers of cold remedies. Swiss drugmaker Roche <ROG.VX> said on April 11 worldwide sales of its Tamiflu prescription drug leapt 84 percent in the first quarter.

Roche warned, however, that bumper Tamiflu sales would not last and demand had tapered off significantly since the end of February.

Deutsche Bank analysts said there was more to Reckitt's growth than a temporary flu boost, though.

"Although the flu season undeniably helped Q1 sales performance, it is the non-flu related areas of the portfolio that were more impressive," they said.

"The home and hygiene products comfortably produced their best life-for-like in many quarters and to a level last seen when market growth rates and the competitive environment were more favourable, sometime in early 2008."

The hygiene sector grew 9 percent on a like-for-like basis, driven by sales of Dettol and Lysol disinfectant, Reckitt said.

The group, which also makes household cleaning products such as Cillit Bang, has been shifting its focus to the faster-growing health and hygiene sector. It is also targeting emerging markets and wants them to make up half its sales by 2015, compared with 44 percent currently.

Reckitt remained bullish on emerging markets, where some consumer goods companies have seen signs of slowing growth.

Chief executive Rakesh Kapoor acknowledged on a call with analysts that "there could be a slowdown", but said overall the business continued to perform well, highlighting brands such as Vanish cleaner in Brazil and Durex condoms in China.

Reckitt's pharmaceuticals business, which makes most of its profit from buprenorphine drugs to wean addicts off heroin, rose 19 percent on a like-for-like basis, well ahead of analyst expectations and boosted by new dosage launches.

U.S. regulators gave the go-ahead for two generic versions of Reckitt's buprenorphine Suboxone drug earlier this year, which had been expected after it went off-patent in 2009.

The early impact of the generic tablets on its sales was in line with expectations, Reckitt said, with the tablets taking around 10 percent market share since their March launch.

Reckitt maintained its group revenue growth forecast for 2013 of between 5 and 6 percent.

"We expect continued challenging market conditions but nonetheless we remain confident that we can achieve our full year targets," the company said.

Shares in Reckitt, which hit a record high of 4,812 pence in March, were flat at around 4,713 pence in early trading.

(Additional reporting by Ben Hirschler; Editing by Mark Potter)

http://www.globalpost.com/dispatch/news/thomson-reuters/130422/reckitt-benefits-flu-season-begin-2013-strongly