A sustained growth in demand for its cleaning products driven by the novel coronavirus pandemic prompted Procter & Gamble Co to raise for the second time its sale forecast for the full year even though the company warned that the roll out of vaccine across the world could slow down the speed of the sales of its cleaning products.
An 8 per cent growth in its net sales for its second quarter was reported by the Cincinnati based conglomerate which was slower compared to its growth of 9 per cent for its first quarter. Despite the drop in growth rate, it indicated a continuation in the surge in demand for cleaning products because of the pandemic.
Compared to the levels prior to the pandemic, customers in the United States were cleaning and sanitizing 30 per cent more, the conglomerate said. While there was a 15 per cent growth in the usage of paper towels, there was a 20 per cent rise in use of air fresheners and 15 per cent more for dishwasher cycles.
For its home care products, there was a 30 per cent growth in sales for the second quarter as reported by the company. On the other hand, the sales of its items like Downy laundry beads and Tide pods were pushed up by a greater willingness among consumers to pay for more premium brands compared to ordinary store-branded goods.
Following a rise of 2.5 per cent, the shares of P&G lost all the gains after executives issued warning a potential drop in sale of cleaning products because of the rollout of Covid-19 vaccines.
“Could there be some reduction in top line growth rates if, God-willing, the situation gets better, and therefore, I need less in my pantry as protection? Yes, that could occur,” finance and operating chief Jon Moeller said.
Despite this, the sales growth forecast for the company’s fiscal 2021 was raised by it from a range of 3 per cent and 4 per cent to a range of 5 per cent to 6 per cent primarily based on the strong sale growth in its first quarter.
P&G also raised its growth forecast for core earnings per share from the range of 5 per cent to 8 per cent, as estimated earlier, to 8 per cent to 10 per cent.
In the fiscal year of 2021, a program for share buy back of up to $10 billion worth of shares will be implemented by the company which was higher than the $7 billion to $9 billion target that the company had previously set. A potential boost to the company because of any new fiscal stimulus under Joe Biden’s presidency was also pointed at by Moeller.
“It’s a rather uncertain environment, but where stimulus has existed it has helped and more of it will help more,” he said.
(Adapted from FirstPost.com)