By Martinne Geller
LONDON (Reuters) - British consumer goods group Reckitt Benckiser reported higher-than-expected sales growth on Monday, helped by improvements in both its health and home and hygiene businesses and boosting its shares to a two-month high.
Reckitt, once seen as a pacemaker for growth in the packaged goods industry, has experienced setbacks in the last three years, including a safety scandal in South Korea, a failed product launch, a cyber attack and the temporary shutdown of a baby milk factory in the Netherlands.
But the maker of Enfamil formula and Lysol cleaners ended 2018 on a more positive note, achieving a 4 percent rise in like-for-like sales in the fourth quarter, topping analysts' average estimate of 3.3 percent in a company-supplied consensus.
The stronger sales overshadowed a forecast for flat operating margins in 2019, which was anyway better than some investors had feared.
Asked about Reckitt's medium-term target for "moderate" margin growth, Chief Executive Rakesh Kapoor told reporters that having a medium-term target did not mean it was valid for every financial year.
Reckitt shares were up 3.9 percent at 62.50 pounds by 0911 GMT, still well down on their 52-week high of 71.74 set in October amid concerns about its performance and a potential pull-back of margins under whoever takes over from Kapoor when he departs later this year.
"Whoever ends up taking the reins from Rakesh Kapoor will of course still have their work cut out," said analyst Fiona Cincotta at City Index, noting Reckitt faces a far more competitive environment as rivals GlaxoSmithKline and Pfizer are merging their consumer healthcare units.
Reckitt forecast 2019 like-for-like growth of between 3 and 4 percent, compared with 3 percent in 2018 and analysts' estimate of 3.5 percent. The group plans to invest cost and efficiency savings into areas such as branding and new products. It is also planning to open a new research and development centre in England this year.
The company said it was on track to complete a new organisational structure by mid-2020, under which it will operate as two standalone units, one focused on health and the other on home and hygiene, but under the same parent company.
"I can assure you, if this was a tradable company, it would be the best performing company in the next 25 years," Kapoor said about the hygiene/home unit, citing opportunities to sell dishwashing tablets in new markets as an example.
Reckitt said the search for a successor to Kapoor was under way. It did not identify internal candidates, though in an unusual move the chief operating officer of its health division Aditya Sehgal and the CEO of its hygiene home business Rob de Groot presented on Monday alongside its CEO and CFO.
(Reporting by Martinne Geller; Editing by Kirsten Donovan and David Holmes)