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Jul 30, 2020

Procter & Gamble sales surge though blistering rate seen slowing

Procter & Gamble Co. Tide Pods brand laundry detergent is arranged for a photograph in Tiskilwa, Illinois, U.S., on Monday, Jan. 22, 2018. Procter & Gamble is scheduled to report quarterly earnings on January 23.

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Procter & Gamble Co. posted a surge in sales this spring as higher at-home consumption of laundry detergent and dish soap plus continued stockpiling gave the consumer-staples giant a boost. But the pace of growth may slow from here.

P&G, which makes cleaning staples including Tide, Dawn and Swiffer, posted a six per cent jump in organic sales in the quarter ended June 30. That helped lift revenue in its fabric and home care unit by a record 14 per cent during the fiscal fourth quarter. It also logged double-digit growth in family care, the home of high-demand Charmin, Bounty and Puffs.

“There’s nothing accidental in the results,” Chief Financial Officer Jon Moeller said in an interview. “We’ll carry this momentum forward into next year.”

Growth will continue in the current fiscal year, P&G said, but at a more subdued pace. Organic revenue, which excludes the impact of things like acquisitions and currency swings, is projected to grow two per cent to four per cent in fiscal 2021, slower than last year’s six per cent pace. P&G is forecasting core earnings per share growth of three per cent to 7 per cent, below the 13 per cent boost recorded in the latest year.

Shares rose 2.6 per cent as of 7:05 a.m. in New York before the start of regular trading.

Moeller said sales growth around household and personal hygiene items will continue as long as consumers spend more time at home. Although P&G is still working to catch up with demand for its Charmin tissue paper and Bounty paper towels, the company is being flexible with its supplies by offering various-sized packages to keep shelves stocked. P&G also benefited from recovering sales in China, which Moeller says is “rebounding very nicely.”

There were some weak spots. With homebound consumers skipping over their shaving routines, the grooming unit was the only division to post organic sales declines in the quarter amid slumping sales of razor blades. Some of its beauty lines, like its high-end SK-II brand, also posted a drop with duty-free airport shopping essentially halted.

Still, P&G is optimistic. “There’s every reason to believe that going forward we’ll continue to build both the top and bottom line,” Moeller said.