COVID-driven cleaning routines boost P&G sales forecast again

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Procter & Gamble raised its full-year sales forecast for a second time 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 percent rise in net sales for its second quarter, slower than 9 percent growth in the first quarter but showing the boom in household cleaning purchases was continuing.

P&G said Americans were cleaning and sanitizing 30 percent more than before the pandemic. Dishwasher cycles were run 15 percent more and air fresheners sprayed 20 percent more often while in-home paper towel usage was up 15 percent.

The company saw a 30 percent 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 percent 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 percent to 6 percent, from 3 percent to 4 percent, mainly on the back of a strong first half.

It also lifted its core earnings per share growth forecast to 8 percent to 10 percent, from 5 percent to 8 percent, and said organic sales are now expected to grow 5 percent to 6 percent, compared with 4 percent to 5 percent 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.

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