Procter & Gamble Co raised its full-year sales forecast for a second time on Wednesday as it benefited from sustained coronavirus-driven demand for cleaning products, while also warning that the pace of sales might slow as vaccines roll out.
The Cincinnati-based conglomerate reported an 8 per cent rise in net sales for its second quarter, slower than 9 per cent growth in the first quarter but showing the boom in household cleaning purchases was continuing.
P&G said Americans were cleaning and sanitising 30 per cent more than before the pandemic. Dishwasher cycles were run 15 per cent more and air fresheners sprayed 20 per cent more often while in-home paper towel usage was up 15 per cent.
The company saw a 30 per cent rise in organic sales of its home care products in the second quarter, while consumer willingness to pay for more premium brands over store-branded goods helped sales of items like Downy laundry beads and Tide pods.
P&G’s shares, which rose as much as 2.5 per cent initially, lost all those gains after executives warned that the rollout of vaccines was liable to cool those trends.
“Could there be some reduction in top line growth rates if, God-willing, the situation gets better, and therefore, I need less in my pantry as protection? Yes, that could occur,” finance and operating chief Jon Moeller said.
Still, P&G raised its fiscal 2021 sales growth forecast to a range of 5 per cent to 6 per cent, from 3 per cent to 4 per cent, mainly on the back of a strong first half.
It also lifted its core earnings per share growth forecast to 8 per cent to 10 per cent, from 5 per cent to 8 per cent, and said organic sales are now expected to grow 5 per cent to 6 per cent, compared with 4 per cent to 5 per cent it anticipated earlier.
The company will also buy back up to $10 billion worth of shares in fiscal 2021, up from the $7 billion to $9 billion target it set earlier, and Moeller pointed to the likelihood of a boost from new fiscal stimulus under Joe Biden’s presidency.
“It’s a rather uncertain environment, but where stimulus has existed it has helped and more of it will help more,” he said.
- Reporting by Siddharth Cavale and Uday Sampath in Bengaluru; Editing by Maju Samuel and Patrick Graham, of Reuters.