Procter & Gamble raised its outlook for the second quarter in a row on Wednesday.
Revenue increased 8% in the second quarter, driven by higher demand for cleaning products and shaving and styling products as the pandemic continues to affect consumer behavior.
The company, whose brands include Tide, Pampers and Bounty, expects sales to grow 5% to 6% in fiscal 2021, after previously forecasting growth of 3% to 4%. Adjusted earnings are also projected to increase 8% to 10% from the previous target of 5% to 8%.
The company’s shares fell 1% in the early trading day.
The company reported for the quarter ended December 31st, versus Wall Street’s expectations, based on an analyst survey conducted by Refinitiv:
- Earnings per share: $ 1.64, adjusted versus expected $ 1.51
- Revenue: $ 19.75 billion versus $ 19.27 billion expected
P&G reported net income of $ 3.85 billion, or $ 1.47 per share, for the second quarter, compared to $ 3.72 billion or $ 1.41 per share last year.
Excluding items, the company earned $ 1.64 per share, beating the analysts surveyed by Refinitiv at $ 1.51 per share.
Net sales rose 8% to $ 19.75 billion, beating expectations of $ 19.27 billion. Organic sales, which exclude the effects of acquisitions, divestments, and foreign currencies, also increased 8%. New products helped increase sales for the quarter.
“It’s a combination of planned products and a quick response to real, emerging needs,” said CFO and COO Jon Moeller in CNBC’s Squawk Box.
For example, Microban 24-hour disinfectant spray was launched in February just before U.S. consumers started buying up every cleaning product they could find due to the pandemic.
In P & G’s Fabric & Household Care segment, organic sales increased 12% for the quarter. This is the company’s largest increase by business area. Home care, which includes Comet cleaning products, saw 30% organic sales growth as more consumers cleaned surfaces and dishes.
The Healthcare segment, which includes Oral B and Vicks products, posted organic sales growth of 9%. Price increases combined with consumer demand for high-end products boosted sales. However, the company said demand for respiratory products was lower this year as fewer people caught cold or flu.
In the nursing and baby, gynecological and family care segments, organic sales increased 6% in the quarter. Organic P&G Grooming Equipment sales increased 20% as consumers search for styling and shaving products for the home.
P & G’s beauty segment, which includes Olay and SK-II, posted organic sales growth of 5%.
The distribution of vaccines has raised questions about whether consumer giants like P&G or Conagra Brands will be able to maintain the same pace of growth once their customers return to their previous routines. At a press conference, Moeller announced that demand for some of its products, which have seen significant sales increases, is likely to be lower. However, other products that have been weakened by recent trends may bounce back. The company also predicts the disappearance of “some very strong headwinds” such as supply chain challenges.
For fiscal 2021, P&G predicts foreign currency headwinds that will cost about $ 100 million after tax, as well as higher freight costs that will also cost $ 100 million after tax.
The company expects to buy back up to $ 10 billion of its own shares over the course of the fiscal year, from a previous estimate of $ 7 billion to $ 9 billion.
Read the full results report here.
