Procter & Gamble on Thursday reported strong quarterly revenue growth as consumers stuck at home bought more Tide laundry detergent and Mr. Clean products.
Even as lockdowns ease and consumers resume past behaviors, the consumer packaged goods giant expects to see higher demand for its products in fiscal 2021.
Shares of the company rose 1.5% in morning trading.
Here’s what the company reported for the quarter ended June 30 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $1.16, adjusted, vs. $1.01 expected
- Revenue: $17.7 billion vs. $16.97 billion expected
P&G reported fiscal fourth-quarter net income of $2.8 billion, or $1.07 per share, up from a loss of $5.2 billion, or $2.12 per share, a year earlier.
Excluding items, the company earned $1.16 per share, topping the $1.01 per share expected by analysts surveyed by Refinitiv.
Net sales rose 4% to $17.7 billion, beating expectations of $16.97 billion. Organic sales, which strip out the impact of currency fluctuations, acquisitions and divestitures, rose 6% during the quarter.
The company attributed the growth to higher demand in North America and China, its second-largest market, for its household cleaning and personal health products during the coronavirus crisis. Its fabric and home care segment, which includes Tide and Comet cleaning products, saw organic sales rise 14% in the quarter.
“There may be a long term increase focused on home — more time at home, more meals at home — with related consumption impacts,” CEO David Taylor told analysts.
Executives said that they expect to see higher demand for those categories in the coming months.
P&G’s baby, feminine and family care segment reported the second-highest increase to its organic sales, up 5%. The category includes Pampers diapers, Bounty paper towels and Charmin toilet paper.
Its beauty products, which include Olay and Pantene, saw organic sales growth of 3%. Organic sales of its pricey SK-II skincare line fell by double digits, driven by travel disruptions related to the pandemic.
The company’s health-care segment reported organic sales growth of 2%. Organic sales of its oral care products, which include Crest and Oral-B, fell as dentist offices and electronics stores closed. But personal health-care products, including Vicks and Pepto-Bismol, saw organic sales grow by double digits.
P&G’s grooming business was once again the only segment to report shrinking organic sales. The company said that some markets are shaving less due to the pandemic, leading to a mid-single-digit decline for its shaving business, which includes Gillette and Venus. In China, which is further along in its recovery, grooming grew by double digits.
Looking to fiscal 2021, the company expects to see challenges continue as the world grapples with the pandemic.
“We’ll likely be operating without a vaccine or advanced therapeutics through fiscal ’21,” CFO and COO Jon Moeller said.
Stricter lockdowns could resume if coronavirus cases surge, which could lead to more difficulties for P&G’s operations and a deeper global recession. In the United States, P&G’s largest market, the unemployment rate was 11.1%, according to the Department of Labor.
In fiscal 2021, the company expects overall sales growth of 1% to 3% and organic revenue growth of 2% to 4%. It is forecasting earnings growth of 6% to 10%. Organic sales growth is expected to be stronger in the first half of the year and normalize in the second half, as P&G laps strong growth driven by the pandemic.
P&G also said it expects to pay out $8 billion in dividends and buy back $6 billion to $8 billion in its own shares in fiscal 2021.
The outlook does not take into account additional geopolitical disruptions, store closures or supply chain issues.