Reckitt Benckiser, the world's biggest maker of household cleaning goods, beat market forecasts and its own targets with a 20 per cent rise in 2004 net profits, but caution about future profit margins held back its shares.
The group said most of its profits growth in future would come from higher sales, and less from margin expansion, and added it will only generate "modest" operating margin expansion in 2005, with most coming in the second half of the year.
Reckitt shares dipped sharply in early dealings to a low of £14.97 but recovered to trade 0.2 per cent lower at £15.78 this morning, having earlier moved briefly into positive territory. One analyst said the results were generally good but the caution on margin growth was a little disappointing.
The British maker of Finish and Calgonit dishwasher products, Lysol disinfectants and Mr Sheen polish shrugged off rising material prices and concern over stiffer competition to set new targets for 2005 aimed at continuing its growth.
The group, which has outperformed its industry rivals over the five years since its formation in 1999, posted 2004 net profits of £586 ($1.1 billion), beating analysts' forecasts of £570 million to £573 million, and said it expected strong underlying growth for the current year.
The 2004 results showed sales up 10 per cent and net profits up 26 per cent when stripping out the effects of exchange rates, well ahead of its targets for sales growth of 9 per cent and net profit growth to 22 per cent at constant currencies.