Morning Sun

P&G raises sales outlook as consumers keep spending

- By Daniela SirtoriCor­tina

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.

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