Reckitt Benckiser raises targets after strong quarter

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The Independent Online

Reckitt Benckiser, the company behind Lemsip flu remedies and Vanish cleaning products, raised its sales and profit targets after a stronger-than-expected third quarter yesterday.

It also said it would save more money, and quicker, from its acquisition of AllianceBoots' over-the-counter medicine arm BHI earlier this year. Its shares leapt 6 per cent to 2,324p.

The group said stronger European sales and popular new products such as Finish 5-in-1, its most powerful dishwashing tablet, had lifted its underlying sales by 7 per cent during the quarter.

It raised its target for net revenue growth at constant exchange rates for its full year to 17 per cent from 15 per cent and expects profit growth at actual exchange rates of 16 per cent, 2 percentage points better than its previous guidance.

Bart Becht, the chief executive, said: "We have good growth momentum on revenue and margins going forward and are confident over our new guidance."

Reckitt keeps shoppers attention by constantly updating its portfolio of household goods. Graham Jones, an analyst at Panmure Gordon, said this approach had helped Reckitt to deliver "a perfect quarter". Analysts nudged their net profit forecasts higher to about £757m, which is 16 per cent more than the £653m the group delivered last year.

The group said its integration of BHI, which makes Neurofen, Strepsil and Clearasil, was reaping higher rewards than it had first anticipated. It now expects cost savings for the year to be £5m higher at £35m and that it will save £80m by the end of 2008, £5m more than its earlier guidance. It has charged £104m to cover the cost of restructuring the division, out of the £150m it expects to spend this year. The sum covers job losses and write-offs related to systems no longer needed.