Procter & Gamble Co raised its full-year sales forecast for a second time on Wednesday as it benefited from sustained coronavirus-driven demand for cleaning products, while also warning that the pace of sales might slow as vaccines roll out.
The Cincinnati-based conglomerate reported an 8% rise in net sales for its second quarter, slower than 9% growth in the first quarter but showing the boom in household cleaning purchases was continuing.
P&G said Americans were cleaning and sanitizing 30% more than before the pandemic. Dishwasher cycles were run 15% more and air fresheners sprayed 20% more often while in-home paper towel usage was up 15%.
The company saw a 30% rise in organic sales of its home care products in the second quarter, while consumer willingness to pay for more premium brands over store-branded goods helped sales of items like Downy laundry beads and Tide pods.
P&G’s shares, which rose as much as 2.5% initially, lost all those gains after executives warned that the rollout of vaccines was liable to cool those trends.
“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.
Still, P&G raised its fiscal 2021 sales growth forecast to a range of 5% to 6%, from 3% to 4%, mainly on the back of a strong first half.
It also lifted its core earnings per share growth forecast to 8% to 10%, from 5% to 8%, and said organic sales are now expected to grow 5% to 6%, compared with 4% to 5% it anticipated earlier.
The company will also buy back up to $10 billion worth of shares in fiscal 2021, up from the $7 billion to $9 billion target it set earlier, and Moeller pointed to the likelihood of a boost from new fiscal stimulus under Joe Biden’s presidency.
“It’s a rather uncertain environment, but where stimulus has existed it has helped and more of it will help more,” he said.