Procter & Gamble reported on Tuesday that fiscal first-quarter revenue rose 9%, fueled by demand for its cleaning and laundry products during the coronavirus pandemic.
On the heels of the strong quarter, P&G raised its sales outlook and expectations for core earnings growth for fiscal 2021.
Shares of the company rose 2% in morning trading.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $1.63 vs. $1.42 expected
- Revenue: $19.32 billion vs. $18.38 billion expected
The company reported net income of $4.28 billion, or $1.63 per share, up from $3.59 billion, or $1.36 per share, a year earlier. Analysts surveyed by Refinitiv were expecting earnings of $1.42 per share.
Net sales rose 9% to $19.32 billion, topping expectations of $18.38 billion. Organic revenue, which strips out the impact of acquisitions, divestitures and foreign currency, also climbed 9% in the quarter. Higher demand in North America, P&G’s largest market, helped drive sales growth.
All of P&G’s five business segments reported organic sales growth. CFO and COO Jon Moeller said on CNBC’s “Squawk Box” that the U.S. saw growth of 16% and China reported growth of 12%. He told reporters on a press call that the company has not seen U.S. consumers opting for cheaper brands, despite the impasse in another stimulus package from the federal government.
Moeller said that e-commerce now accounts for about 11% or 12% of total sales.
Fabric and home care, which includes Tide and Comet cleaning products, saw the highest jump, with organic sales rising 14% in the quarter.
The home care segment saw organic sales soar 30%, fueled by demand for home cleaning products, like Mr. Clean.
Health care, which includes Crest toothpaste, Vicks, Pepto-Bismol and Oral-B, also reported double-digit organic sales growth. More consumers bought its digestive and wellness products.
Its beauty segment saw organic sales growth of 7%. The launch of Safeguard hand soap and hand sanitizer and new products from Olay lifted North American sales for skin and personal care.
Organic sales for its grooming business rose 6% in the quarter, but its shaving business, which includes Gillette and Venus brands, reported flat organic sales. P&G said women’s razors and blades rose by single digits, but men aren’t shaving as much during the pandemic.
The company’s baby, health and family care segment reported organic sales growth of 4%. The category includes Pampers diapers, Bounty paper towels and Charmin toilet paper.
As consumers spend more time watching television and checking social media, P&G is putting more money into advertising. Higher demand for cleaning products also pushed the company to spend more on advertising to put its brands front and center.
“This is not the time to step back,” Moeller said.
Moeller also said that promotions in the U.S. have largely returned to normal levels, with the exception of products that are still recovering from stockouts.
P&G now expects sales growth of 3% to 4% during fiscal 2021, up from its prior forecast of 1% to 3%. Organic revenue is now forecast to rise by 4% to 5%, higher than its previous expectations of 2% to 4%.
While the early retirement of debt will reduce its net income by 5 to 20 cents a share this fiscal year, core earnings per share will be higher than previously expected. The company is forecasting growth of 5% to 8%, up from its prior forecast of 3% to 7%. After-tax foreign exchange impacts and freight costs are expected to hit earnings by a combined $375 million.
P&G expects to buy back more stock as well during the fiscal year. The company previously said it would spend $6 billion to $8 billion on buying back shares but now plans on spending $7 billion to $9 billion.