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P&G Sees Sales Up In Q1, Warns Of Higher Supply Chain Costs

Procter & Gamble beat quarterly sales estimates as the easing of pandemic-related restrictions boosted demand for its personal care products, while the company warned of higher commodity and transportation expenses.

The consumer goods giant said it now expects a hit of about $2.3 billion related to commodity and freight costs this fiscal year, compared with a prior forecast of about $1.9 billion, as the stop-and-start nature of the pandemic, worker shortages and clogged shipping ports affect global supply chains.

According to a report in the Wall Street Journal, the company is set to increase the prices of certain goods to offset the impact of higher commodity and freight costs.

The new price hikes are not being implemented broadly, but marked for specific items such as razors and in some sub-categories, CFO Andre Schulten said on a media call. US retailers are aware of the new sticker prices, he added.

Quarterly Performance

Previous price hikes due to the rising costs and an increase in demand for personal care products spurred by people returning to social events helped boost P&G's sales by 5% to $20.34 billion in the first quarter of its financial year.

Analysts had expected sales of $19.91 billion, according to IBES data from Refinitiv.

Net income attributable to Procter & Gamble decreased 4% to $4.11 billion, or $1.61 per share.

Commenting on the company's performance, chairman, president and chief executive officer, David Taylor said, "These results keep us on track to deliver our top-line, bottom-line and cash targets for the fiscal year. We remain focused on executing our strategies of superiority, productivity, constructive disruption and continually improving P&G’s organisation structure and culture.

"These strategies enabled us to build strong momentum before the COVID crisis and accelerate progress as we navigate through the crisis, and they remain the right strategies to deliver balanced growth and value creation."

The company has appointed Jon Moeller, its current chief operating officer and long-time executive, as its new chief executive, effective November 2021.

Divisional Performance

The company's beauty division reported a 2% year-on-year growth in organic sales, with hair care organic sales seeing a low single digits growth due to pricing and favourable mix from premium innovation in treatments and conditioners.

Organic sales in the skin and personal care category reported low single-digits growth, primarily driven by pricing and higher volumes, partially offset by negative geographic mix.

The fabric and home care division reported a 5% growth in organic sales, with the fabric care category seeing high-single-digit organic growth driven by innovation, pricing and mix.

In the home care category, organic sales increased to low single digits primarily due to pricing, partially offset by a base period that benefited from pandemic-related consumption increases in North America.

The FMCG giant's grooming segment saw 4% year-on-year growth in organic sales, while the health care division saw organic sales up 7% compared to the same period last year.

The baby, feminine and family care division posted a 2% growth, with the baby care segment reporting sales growth in mid-single digits due to a positive mix from the disproportionate growth of premium pants and taped diapers, pricing and innovation-driven volume growth.

News by Reuters, additional reporting by ESM. For more A-Brands stores, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.

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