Saturday, February 27, 2021

P&G raises its annual forecast for a lasting cleaning boom

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The high demand for paper towels, dishwashing liquid and laundry detergent lasted through the winter, giving Procter & Gamble a further surge in sales and prompting the consumer goods spokesperson to increase its sales again. annual forecasts.

The US-based household products group behind brands like Ariel, Bounty, Tampax, Pampers, and Head & Shoulders generated $ 19.7 billion in net sales in the last three months of last year, 8 % more than a year ago.

Wall Street analysts had predicted that P & G’s organic sales growth rate in its fiscal second quarter would drop from 9% in the previous quarter to around 6%, but the latest batch of results to beat the group’s expectations indicates an increase induced by a pandemic. cases show few signs of discoloration.

The tendency of consumers to stay indoors leads them to wash and cook at home more often than usual and to use the bathroom more frequently. The phenomenon has fueled demand for a wide range of basic products, from dish tablets to toilet paper.

Concerns over the spread of the coronavirus have made consumers more hygiene conscious, further benefiting companies in the sector, including Reckitt Benckiser from the UK and Kleenex maker Kimberly-Clark, as well as Procter & Gamble.

P&G shares rose 14% in 2020, although before Wednesday’s gain they were down 3% this year, with Wall Street wondering how much longer the boom could continue.

Concerns about the economy have also prompted some analysts to worry about how long buyers will be willing to pay a premium for P&G brands, which tend to be more expensive than their rivals.

Still, shares of the Cincinnati-based company, which has a market cap of $ 331 billion, rose 2.5% in pre-market trading on Wednesday after P&G said it was now on the right track. to generate an annual increase in sales of between 5 and 6 percent in its fiscal year – up from its previous forecast of an increase of between 3 and 4 percent.

Fiscal second quarter net income increased 4 percent from same period a year ago to $ 3.89 billion, equivalent to diluted earnings per share of $ 1.47 .

Each of the company’s five main divisions saw an increase in organic sales, driven by a 12% increase in its fabrics and home care division and a 9% increase in healthcare. Even the grooming industry, which suffered from men’s tendency to shave less, produced a 6% increase.

P&G managed to increase prices by 1%, while volumes increased by 5%. A more favorable business mix also contributed to the improvement in revenues, and organic sales, which exclude the impact of foreign exchange rates, acquisitions and divestitures, increased 8% overall.

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