Procter & Gamble Sales Jump, Though Rapid Rate Seen Slowing

Procter & Gamble Co. posted a surge in sales this spring as higher at-home consumption of laundry detergent and dish soap plus continued stockpiling gave the consumer-staples giant a boost. But the pace of growth may slow from here.

P&G, which makes cleaning staples including Tide, Dawn and Swiffer, posted a 6% jump in organic sales in the quarter ended June 30. That helped lift revenue in its fabric and home care unit by a record 14% during the fiscal fourth quarter. It also logged double-digit growth in family care, the home of high-demand Charmin, Bounty and Puffs.

“We haven’t seen demand slow down for home care in July yet, which bodes well for the rest of the year,” David Taylor, chief executive officer, said on an earnings call.

Growth will continue in the current fiscal year, P&G said, but at a more subdued pace. Organic revenue, which excludes the impact of things like acquisitions and currency swings, is projected to grow 2% to 4% in fiscal 2021, slower than last year’s 6% pace. P&G is forecasting core earnings per share growth of 3% to 7%, below the 13% boost recorded in the latest year.

Shares rose as much as 2% as of 9:30 a.m. in New York.

Moeller said sales growth around household and personal hygiene items will continue as long as consumers spend more time at home. Although P&G is still working to catch up with demand for its Charmin tissue paper and Bounty paper towels, the company is being flexible with its supplies by offering various-sized packages to keep shelves stocked. P&G also benefited from recovering sales in China, which Chief Financial Officer Jon Moeller said in an interview is “rebounding very nicely.”

“If you take China as the bellwether, and there obviously the first ones that went through this, things look good,” he said.

There were also some weak spots. With homebound consumers skipping over their shaving routines, the grooming unit was the only division to post organic sales declines in the quarter amid slumping sales of razor blades. Some of its beauty lines, like its high-end SK-II brand, also posted a drop with duty-free airport shopping essentially halted.

Still, P&G is optimistic. “There’s every reason to believe that going forward we’ll continue to build both the top and bottom line,” Moeller said. “We’ll carry this momentum forward into next year.”

©2020 Bloomberg L.P.

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