P&G boosts sales, profit outlook as it expects demand to continue

Pandemic has led to rise in at-home demand for laundry products, toilet roll

All of Procter & Gamble  business units have seen higher sales, with gains driven by the fabric and home care unit along with the healthcare division.  Photograph: Laurent Gillieron/EPA

All of Procter & Gamble business units have seen higher sales, with gains driven by the fabric and home care unit along with the healthcare division. Photograph: Laurent Gillieron/EPA

 

Procter and Gamble boosted its sales and profit outlook on expectations that surging at-home demand for its toilet paper and laundry detergent will continue, even as the rapid pace of growth took a slight dip in the latest quarter.

The maker of Charmin, Tide and other household staples now expects organic revenue to grow as much as 6 per cent in fiscal 2021, an increase from the previous outlook of no more than 5 per cent. P&G also sees core earnings per share rising as much as 10 per cent, according to a statement Wednesday, up from a range of 5 per cent to 8 per cent.

“The categories that benefit from people being at home continue to benefit,” chief financial officer Jon Moeller said in an interview. “These aren’t things that necessarily go away.”

The forecast boost shows there’s still room to grow for companies making in-demand products during the pandemic. Cleaning supplies, along with items such as loungewear and packaged food, have been hot sellers for months, though investors are keeping a close eye on whether manufacturers and retailers can hang onto the new customers once the pandemic begins to subside.

P&G shares climbed 11 per cent last year, trailing a 16 per cent gain in the S&P 500 Index.

The company’s organic sales, which strip out some items like currency swings and acquisitions, increased 8 per cent during the fiscal second quarter, which ended December 31st. All of P&G’s business units saw higher sales, with gains driven by the fabric and homecare unit along with the healthcare division.

Grooming Demand

With cleaning at the forefront of consumers’ minds, organic sales increased about 30 per cent in its homecare operations, which include brands like Cascade detergent and Comet cleaning supplies. The grooming category, which has experienced uneven demand amid widespread stay-at-home measures, saw another quarter of mid-single digit growth, driven by gains of more than 20 per cent for its shaving appliances.

The results mark a modest slowdown from the strong performance by the packaged-goods giant in the previous quarter, with key categories like fabric and homecare growing at a slower pace in the most recent period. Still, the trends that have led to elevated demand over the past year don’t seem to be going away anytime soon.

Though sales might not be as strong as they were when stockpiling was rampant, sticky habits formed by consumers over the past year mean an immediate return to pre-pandemic behavior is unlikely, Mr Moeller said. He sees elevated demand continuing until Americans are vaccinated.

“Health, hygiene and the clean-home focus of consumers has been forever altered,” Mr Moeller said. “The demand may not stay at the exact same level it is today, but it’s hard to imagine that, for instance, hand cleaning and hand sanitization revert to where they were previously.” – Bloomberg