Procter & Gamble Sales Gain on Coronavirus Pantry Stockpiling

(Bloomberg) -- Procter & Gamble Co. posted a 6% surge in organic sales, giving a glimpse into panic-buying of toilet paper and cleaning products as the Covid-19 pandemic spread.

Demand for Charmin bath tissue and Bounty paper towels helped drive a double-digit gain in the family care division during the fiscal third quarter, though this was partially offset by the fact that people were buying products like toilet paper in cheaper bulk sizes.

Jon Moeller, chief financial officer, told reporters on a conference call that pantry loading more than offset declining sales in China. He also said he expects habits developed during the outbreak to continue. “Consumption of our products isn’t likely to dissipate,” he said.

Grocery store shelves around the world have been depleted of items like paper towels and cleaning wipes as people stock up to comply with stay-at-home orders. Other categories where P&G saw big gains were in home care, which include its Swiffer floor cleaners, and health care, made up of over-the-counter products like Pepto Bismol. The spike in demand has led P&G and its competitors to ramp up production, a challenge when they also have to take measures to keep workers safe.

While Moeller said that there could be months of sporadic production suspension, retail inventory levels should to return to normal as the company rebuilds stock. U.S. production was 22% higher than the average over the previous 12 months, he said. The company is also taking steps to protect the health of production workers.

Not every segment had a strong quarter. Year-over-year net sales of beauty products grew just 1% and grooming was flat. While P&G is gaining market share in the razor market, people are just shaving less frequently, Moeller said.

Core earnings per share were up 10% and beat estimates, but P&G kept the forecast steady, a sign that the fiscal third-quarter patterns might not hold for the remainder of the year.

JPMorgan analyst Andrea Teixeira said that when P&G moved up its release date from April 21, most investors expected that the quarter’s results would be strong. While the earnings were better than anticipated, “organic revenue growth came in slightly below bullish expectations.”

Shares were little changed before regular trading Friday in New York. P&G has slid 2.7% this year through Thursday, well ahead of the 13% decline in the S&P 500 Index.

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