Procter & Gamble has lifted its full-year sales forecast after a global boom in house cleaning extended into the autumn, with shoppers willing to pay more for brand-name household goods despite the economic downturn.
Changes in customer behaviour during the pandemic have benefited P&G long after pre-lockdown stockpiling, allowing the US group behind Bounty paper towels, Ariel detergent and Tampax tampons to generate $19.3bn in net sales in the three months to the end of September — 9 per cent more than a year ago on an organic basis.
Consumers have been spending more time in the house and preparing more food themselves, leading them to wash clothes and dishes more often and use more toilet paper. Coronavirus concerns have also made them more hygiene-conscious, further fuelling demand for cleaning products.
The biggest sales rise was at P&G’s fabric and home care division, whose brands include Fairy washing up liquid and Bold laundry products. Within the unit, home care organic sales surged more than 30 per cent and there was “double-digit growth in every region”, P&G said on Tuesday. Organic sales surged 14 per cent across the division.
They also rose 12 per cent in healthcare, covering Vicks cough relief and Oral-B dental care, and 7 per cent in beauty, behind brands such as Head & Shoulders and Pantene.
In contrast to earlier quarters, organic sales rose at each of P&G’s five main divisions — including grooming, where they rose 6 per cent. Grooming sales had been weak earlier in the pandemic in part because men with no need to go to work were shaving less, hurting demand for Gillette.
P&G, a bellwether for the consumer goods sector, added that increased demand for dry shaving and styling products, as well as higher prices, had helped the division recover.
Some analysts have questioned for how long shoppers will remain prepared to pay a premium for P&G brands, which tend to be more expensive than rival products. The company was hit in the aftermath of the 2008 crash as customers “traded down” to cheaper alternatives.
But its third-quarter figures showed the US-based group was able to nudge prices higher without sacrificing volume, reassuring Wall Street and sending shares up 2 per cent in pre-market trading. They have been trading near record highs to give the group a market capitalisation of $353bn
The quarterly sales rise marks an acceleration following the 6 per cent year-on-year rise in the previous quarter. It is the latest sign P&G is reversing a multiyear trend in which the company came under competitive pressure from alternative products developed by supermarkets and other upstart rivals.
The Cincinnati-based company produced net income of $4.3bn in the quarter, up from $3.6bn in the same period a year ago.
On the back of the quarterly earnings, P&G increased its target for the full year.
The company said it expected organic sales in its financial year to rise between 4 and 5 per cent, higher than a previous forecast of between 2 and 4 per cent.
It also expects diluted earnings per share to rise between 4 and 9 per cent. P&G said it expected to return between $15bn and $17bn in cash to shareholders through dividends and share buybacks.