Pandemic-driven cleaning routines boost P&G sales forecast again

1:10 pm Wednesday, January 20th, 2021

By Siddharth Cavale and Uday Sampath Kumar

(Reuters) – 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% rise in net sales for its second quarter, slower than 9% growth in the first quarter but showing the boom in household cleaning purchases was continuing.

P&G said Americans were cleaning and sanitizing 30% more than before the pandemic. Dishwasher cycles were run 15% more and air fresheners sprayed 20% more often while in-home paper towel usage was up 15%.

The company saw a 30% 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% 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% to 6%, from 3% to 4%, mainly on the back of a strong first half.

It also lifted its core earnings per share growth forecast to 8% to 10%, from 5% to 8%, and said organic sales are now expected to grow 5% to 6%, compared with 4% to 5% 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)