P&G raises sales outlook as consumers keep spending
Procter & Gamble Co. raised its sales outlook for its current fiscal year as price hikes helped offset a stubborn round of higher costs.
Sales in the quarter ended Dec. 31 were $21 billion -- above the $20.3 billion average estimate of 15 analysts surveyed by Bloomberg.
For the closely watched metric of organic revenue growth, which strips out some items, P&G now expects full-year organic sales growth of 4% to 5%, compared with an earlier projection of 2% to 4% growth, the household-goods giant said in a statement Wednesday.
Consumers have so far reacted to price hikes better than in the past, Chief Financial Officer Andre Schulten said. That’s helped P&G cope with rising costs related to commodities, freight and foreign currency.
The maker of Tide detergent and Downy fabric softener said its fiscal 2022 outlook now includes $2.8 billion in combined headwinds, up from $2.4 billion projected in November.
“We have offerings for the consumer at different price points,” Schulten said on a call with analysts. “In that sense, I think we are set up well from a starting point to deal with inflation and related pricing.”
Shares of Cincinnatibased P&G rose 4.1% at 9:51 a.m. in New York. The stock had risen 17% in the 12 months through Tuesday, reaching an all-time high earlier this year.
The pandemic has been marked by brisk demand for household products. Among P&G’S main lines of business, health care as well as fabric and homecare products posted organic sales growth of 8% in the quarter.
The health business benefited from increased demand for respiratory products due to a more intense flu season.
P&G plans to raise prices on fabric-care products at the end of February and on some personal health brands in mid-april.
“There’s no doubt at present that demand is stronger than supply,” Chief Executive Officer Jon Moeller said on the call.
Analysts pressed P&G about its acquisition strategy in the wake of reports that rival Unilever is weighing a higher bid for Glaxosmithkline’s consumer business. Moeller said he likes the current portfolio and will be “very disciplined” on any deals.
Skin care and personal health care are the two categories that P&G considers particular focus areas for potential deals, but “we don’t need large M&A to deliver” on financial targets, Moeller said on the call.