Reckitt Benckiser's (RB) interim results put the firm on track to beat our 2015 forecasts, and management raised guidance for the full year. We regard some of the drivers of the beat as sustainable, while others will likely moderate over the course of the next year and a half. We will likely raise our revenue and operating income expectations accordingly. Nevertheless, we doubt this change will have a meaningful impact on our £51.06 fair value estimate. Our narrow economic moat rating also remains intact.
Growth throughout the business remained fairly constant from the first quarter. Consolidated revenue grew 5% on a like-for-like basis, driven by the Health segment, up 13%, which benefited from a strong flu season in the U.S. and some successful product initiatives, the effects of which will create a difficult comparison next year. Geographically, developing markets, up 8%, remain the growth engine, and we expect this to be a more sustainable growth rate.
It was also a strong margin performance in the first half of the year. The adjusted EBIT margin of 21.9% was 160 basis points from the level a year ago. Again, however, the improvement was caused by a combination of sustainable profitability improvements from Project Supercharge, and temporary boosts from lower input costs.
We expect a slight moderation in profitability improvements in the second half of the year as Reckitt cycles some one-time cost savings a year ago. Nevertheless, this was a strong quarter for Reckitt Benckiser that justifies management's strategic focus on the Health and Hygeine segments.
