Containers of Tide detergent on grocery store shelves in New York.
Richard B. Levine | Corbis | Getty Images
Procter & Gamble on Tuesday topped analysts’ estimates for quarterly earnings and revenue as consumers maintained pandemic buying trends like purchasing more cleaning supplies and started buying beauty products again.
The company, whose portfolio includes Tide detergent, Charmin toilet paper and Pampers diapers, also announced that it will raise prices on some products this autumn.
Shares of the company fell less than 1% in premarket trading.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $1.26 vs. $1.19 expected
- Revenue: $18.1 billion vs. $17.9 billion expected
For the third quarter ended March 31, net income rose to $3.27 billion, or $1.26 per share, up from $2.92 billion, or $1.12 per share, a year earlier. Analysts surveyed by Refinitiv were expecting earnings per share of $1.19. Profit margins were hurt by higher commodity and freight costs this quarter.
Net sales rose 5% to $18.1 billion, beating expectations of $17.9 billion. Organic revenue grew 4% in the quarter. E-commerce now represents 14% of P&G’s sales worldwide.
“In aggregate, our market share in e-commerce are about equal to brick and mortar,” Chief Operating Officer Jon Moeller told analysts.
The company’s fabric and home care segment, which includes Dawn and Cascade dish detergents, reported organic sales growth of 7% from a year earlier, when many North American consumers were stockpiling cleaning supplies.
P&G’s beauty segment also reported organic revenue growth of 7%. Consumers have started buying skin-care products, like its premium SK-II brand, again, and Chinese customers led growth in hair-care products.
The health-care business saw organic sales grow by 3% in the quarter. The growth came from the segment’s oral care products, which include Oral B toothbrushes, while its cold and flu products lagged. Social-distancing measures resulted in a weaker flu season this year.
The company’s grooming segment, which includes Gillette and Venus, saw organic sales growth of 4%. Organic sales of shaving appliances rose more than 20%. Men, however, are still growing out their pandemic beards and bought fewer blades and razors than women.
Baby, feminine and family care was the only segment with declining organic sales. The company said that fewer consumers bought its baby care products, like Pampers diapers, due to competition and retailer inventory. The segment faced tough comparisons from a year ago.
The company reiterated its fiscal 2021 outlook, forecasting sales growth of 5% to 6% and adjusted earnings growth of 8% to 10%. But it’s now expecting to absorb higher raw material and transportation costs. P&G is forecasting spending an additional $125 million on commodity costs, which was previously expected to be flat for the year, and $200 million on freight, up from its prior full-year outlook of $100 million last quarter.
P&G has started implementing price hikes across its baby-care, feminine-care and adult incontinence products in the United States to offset rising commodity costs. Price increases will vary by brand but will be in the range of mid-to-high single digits. Consumers can expect the price increases to go into effect in September. Rival Kimberly-Clark, which makes Huggies, has already announced price hikes on some of its products.