P&G Cleans Up on Pandemic-Driven Hygiene
October 20 2020 - 7:29AM
Dow Jones News
By Sharon Terlep and Saabira Chaudhuri
Procter & Gamble Co. reported its biggest global sales
increase in 15 years as the world's consumers spent more to keep
their homes and themselves clean during the coronavirus
pandemic.
Even as the economic picture grew bleaker around the world, the
maker of Tide detergent and Gillette razors said demand grew for
pricier products. It logged the strongest growth in the unit that
sells Swiffer mops and Dawn dish soaps.
Earlier Tuesday, Lysol maker Reckitt Benckiser Group PLC
reported its sharpest quarterly sales growth on record, driven by
its hygiene unit.
Where sales gains early in the coronavirus pandemic were driven
by consumers stocking up amid lockdowns and shortages of products
such as paper towel and toilet paper, P&G said demand in recent
months appears driven by an increased focus on home cleaning and
personal hygiene as people remain home more.
"The dynamics associated with this period of economic difficulty
are different than in the past," P&G finance chief Jon Moeller
said in an interview. "Large portions of peoples' budgets are not
being spent on travel, leisure and hospitality, which leaves them
more money in the budget."
Reckitt Chief Executive Laxman Narasimhan said he thinks renewed
interest in hygiene will outlast the pandemic: "Consumers are
adopting better hygiene practices," he said in a call with
journalists.
Lysol maker Reckitt Benckiser Group PLC and Clorox Co. have
reported booming demand for their cleaning products, straining
their abilities to keep stores stocked with their disinfectant
sprays or wipes.
Reckitt said it had doubled capacity for Lysol and other major
disinfectant products from a year ago -- through capital investment
and by adding contract packers and raw material suppliers. It said
it was "well positioned" to meet future demand.
P&G and its peers have cut back on deals and discounts as
demand is so high that consumers buy whatever they can find.
P&G said organic sales, a measure that excludes currency
moves, acquisitions and divestitures, rose 9% for the quarter ended
Sept. 30 compared with a year earlier. Increased consumption drove
most of that growth, but consumers also paid higher prices and
shifted toward more premium products, such as Tide laundry pods and
scented laundry beads, the company said.
Sales of private-label household and personal-care products fell
1% overall in the U.S. for the four-week period ended Oct. 3,
according to Nielsen, a signal that consumers are leaning toward
higher priced, name-brand products.
The biggest growth was in P&G's home-care unit, where sales
jumped 30%. The unit's products include Swiffer, Febreze air
freshener and Mr. Clean. An antibacterial surface cleaner, Microban
24, launched in February and initially planned as a niche product,
is on track to reach $200 million in annual sales.
Overall, P&G said net sales for the quarter were $19.3
billion, up 9% versus the prior year. Net income was $4.31 billion,
or $1.63 per diluted share, an increase of 20% from the prior
year.
The results were ahead of Wall Street's expectations. Analysts
polled by FactSet predicted sales of $18.35 billion and earnings of
$1.41 per diluted share.
The company raised its guidance for sales and profit gains for
the fiscal year ending in June 2021. It now expects organic sales
to rise between 4% and 5% for the year, compared with its prior
forecast of 2% to 4% growth.
Reckitt, which in addition to Lysol and Finish dishwasher
tablets, sells big international brands like Dettol disinfectant
and Harpic toilet cleaner, said its third-quarter comparable sales
rose 13.3% compared with the year before, beating analysts'
estimates.
Revenue rose to GBP3.51 billion ($4.55 billion) from GBP3.29
billion. Reckitt didn't report net income for the quarter.
Its hygiene unit logged a jump of 19.5% in sales, driven by
sales of Lysol, Finish and Air Wick. Reckitt recently launched a
new business selling its cleaning expertise to hotel operators,
airlines and other companies and on Tuesday the company said it had
added Amtrak and Airbnb Inc. to its list of clients.
Write to Sharon Terlep at sharon.terlep@wsj.com and Saabira
Chaudhuri at saabira.chaudhuri@wsj.com
(END) Dow Jones Newswires
October 20, 2020 07:14 ET (11:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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