Reckitt Benckiser Group plc (RBGLY) posted slightly better-than-expected second quarter sales Monday and lifted it mid-year dividend as the group prepares to exit the food business and focus on consumer healthcare.
Reckitt said sales for the three months ending in June rose 3% on a constant exchange rate basis to £2.479 billion, modestly higher than the FactSet consensus of £2.5 billion. Half year sales, the group said, slipped 1% on a like-for-like basis to £5.017 billion but grew 2% on a constant currency basis. Reckitt said it boosted its dividend 14% to 66.6 pence per share.
Reckitt had cautioned earlier this month that its second quarter revenues would take a significant hit as a result of the impact of the petya cyber attack that spread across Europe and Asia late last month. Reckitt said its full year revenue target was adjusted to grow 2% from 2016, compared to a previous forecast of 3%.
"I expect the RB business to return to growth progressively over the second half of the year. As set out in our statement of 6 July, we are targeting full year net revenue +2% LFL growth for the RB base business," said CEO Rakesh Kapoor. "I see this as a challenging target. We are experiencing tough market conditions, and we still have work to do on addressing the full implications of the recent cyber-attack. Operating margin continues to make satisfactory progress and we reiterate our medium-term target of moderate expansion."
The group agreed to sell its food business to McCormick & Company Inc. (MKC - Get Report) last week for $4.2 billion. Reckitt said it would use the sale proceeds to reduce debt, which grew by $21 billion through a pair of financing transactions in March led by Bank of America Merrill Lynch, Deutsche Bank and HSBC in order to fund its $18 billion acquisition of infant nutrition group Mead Johnson (MJN) earlier this year.
Reckitt described the food business, which generated around $530 million of the group's $12.9 billion in 2016 revenue, as "non-core" when it updated on its strategic review in April.
Reckitt shares were marked 1.9% lower at 7,725 pence each in the opening 30 minutes of London trading, trimming their full-year gain to around 13%.
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