By Richa Naidu and Agata Rybska
LONDON (Reuters) - Consumer goods group Reckitt's like-for-like sales growth beat estimates in the first quarter as more people bought its Lysol, Dettol and Finish cleaning products even as prices rose, it said in a trading update on Wednesday.
Shares in Reckitt were up nearly 6% in morning trade.
The company also reiterated that it faces "contingent liabilities" - a term used for those dependent on future events - from a product liability suit filed against its Mead Johnson infant formula business in the United States.
An Illinois jury in March ordered Mead Johnson to pay $60 million to the mother of a premature baby who died of an intestinal disease after being fed the company's Enfamil Premature 24 baby formula. Mead Johnson said in March it would appeal the verdict.
"It's a complex litigation. It's early stages," CEO Kris Licht said in a call with journalists.
The company said it was on track to meet full-year revenue and profit targets, led by mid single-digit growth across its health and hygiene businesses.
"We could expect the share price to outperform peers today, somewhat constrained by the ongoing litigation uncertainty," Jefferies analyst David Hayes said.
Reckitt's quarterly like-for-like net sales rose 1.5%, against a 0.9% decline expected by analysts in a poll by the company.
"We continue to benefit from carryover pricing and consumers trading up to our premium innovations," Licht said.
Consumer companies from Reckitt to Nestle have invested heavily in product innovation to win back shoppers who had turned to cheaper brands during the COVID-19 pandemic and more recent cost-of-living crisis.
They hope improvements to existing products will allow them to raise prices without taking a hit on sales volumes.
Reckitt's other products include Nurofen tablets, cold remedy Lemsip and Durex condoms.
The company said first-quarter volumes rose 2.9% at the company's hygiene business - its largest by revenue - but the price/mix metric that shows how much its products sold for rose by 4.2%.
Its overall price/mix ratio rose 2% while volumes declined by 0.5%. Analysts had expected a 2.2% price/mix gain and volumes to decrease by 3.2%.
(This story has been corrected to say that analysts had expected a 0.9% decline in like-for-like net sales, not an increase, in paragraph 8)