Business

Reckitt Benckiser braces for 'tough' 2016

Gaviscon heartburn tablets Image copyright Newscast/Daniel Herbert
Image caption Sales of Reckitt Benckiser's health products such as Gaviscon rose by 14% in 2015

Household products giant Reckitt Benckiser has predicted "tough" conditions this year after posting better-than-expected sales for 2015.

The owner of brands including Dettol, Neurofen and Gaviscon tablets beat forecasts with a 6% rise in like-for-like sales to £8.87bn.

A strong cold and flu season helped like-for-like sales in the health division to rise by 14%.

Pre-tax profit for the 12 months to 31 December rose £82m to £2.2bn.

Shares rose 6.8% to £63.71 in Monday's trading in London, valuing the company at about £45bn. The stock has increased by close to 12% over the past 12 months.

Reckitt Benckiser said it expected growth to continue in 2016 despite a "tough" economic environment.

The company, which has shortened its name to RB, said its focus on key markets and so-called "Powerbrands", such as Strepsils and Air Wick, would help it to ride out volatile economic conditions.

Chief executive Rakesh Kapoor said: "In 2016, we expect that the macro environment will be tough, but remain confident that our strategic choices across Powerbrands and Powermarkets will enable RB to deliver another year of growth and margin expansion."

Mr Kapoor predicted like-for-like net revenue growth of between 4% and 5% this year and a "moderate" expansion in profit margins.

Steve Clayton, a Hargreaves Lansdown analyst, said: "Reckitt certainly falls into the category of expensive defensives, but another strong set of results shows why the company continues to earn its premium price tag.

"There aren't many companies that can raise sales and margins year in, year out, in almost any economic environment, but Reckitt has done just that over the last 10 to 15 years."

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