By Siddharth Cavale

(Reuters) – Higher vaccination rates and improved mobility during the third quarter drove strong demand for Mucinex cough syrups and Durex condoms, Reckitt Benckiser Group said on Tuesday, prompting it to raise its full-year forecast.

That sent its shares up 5.8% in morning trading, making it the top gainer on the FTSE index.

Sales of over-the-counter medicines rose more than 20% in the quarter, driven primarily by Mucinex cough and cold remedies after a strong cold and flu season saw sales across most of its markets come in at or above 2019 levels, it said.

Improved mobility in markets including India also saw the company gain share in sexual wellness products such as Durex, Chief Executive Laxman Narasimhan said on a media call.

That drove like-for-like sales up 3.3% in the quarter, compared to the 0.7% drop analysts had expected, according to company-supplied estimates, which excluded sales from the recently completed sale of its infant nutrition business in China.

The company also raised its full-year net revenue like-for-like growth forecast to 1-3% from flat to 2% earlier, but cautioned that growth would be “softer” in the fourth quarter.

Like its peers, Reckitt said it was seeing a sharp rise in raw materials costs, which were up 10% in the quarter compared with an 8-9% rise it had estimated previously.

Chief Financial Officer Jeff Carr said he expected inflation to be “up a touch” in the fourth quarter and possibly in the low double digits in 2022, but could not estimate when these higher costs would subside.

There will be another round of pricing we will take to offset the inflation,” Narasimhan said, over and above the 1.7% hikes it took in the third quarter.

Domestos maker Unilever last week also warned of another round of price hikes to battle fierce inflation.

Reckitt kept its adjusted operating profit margin forecast, excluding IFCN China, for the year in the range of 22.7% to 23.2%

Shares in the group were down 16% this year before the results, after hitting near-record levels in 2020.

(Reporting by Siddharth Cavale in Bengaluru; Editing by Anil D’Silva and Jan Harvey)