‘Strong momentum’: P&G raises 2021 fiscal outlook as Q1 net sales bloom
P&G generated net sales of €16.2bn (US$19.3bn) for the first quarter (Q1) of fiscal 2021, up 9% on the previous year. Results were driven by a 14% rise in fabric and home care; 11% rise in health care; 7% rise in beauty; 5% rise in grooming and 3% rise in baby, feminine and family care.
‘Strong momentum’ before and during COVID-19
David Taylor, chairman, president and CEO of Procter & Gamble, said the Q1 results were strong and contributed to the move to increase the company’s full-year outlook for fiscal 2021.
P&G had now raised its 2021 fiscal outlook from 1-3% to 3-4% versus fiscal 2020. The company also raised its outlook for organic sales from 2-4% to 4-5%.
Speaking to investors during the company’s Q1 earnings call yesterday, Jon Moeller, vice chairman, COO and CFO of P&G, said these outlooks had been raised despite the “challenging backdrop” presented by the ongoing COVID-19 crisis.
“We built strong momentum leading up to the crisis, with 6% organic sales growth in the calendar year 2019. We maintained 6% growth in the first half of calendar 2020, overcoming significant challenges including the lockdown in China, closure of the travel retail, electro, specialty beauty and away-from-home channels,” Moeller said.
And now, P&G had delivered “strong momentum” in Q1 2021, he said, which showed the “underlying strength” of its brands and “appropriateness” of the company’s strategy during COVID-19.
P&G three-pronged crisis strategy
“As we outlined each of the last two quarters, we’ve established three priorities that have been guiding our actions and our choices in this crisis period,” he said. Firstly, P&G had continued to ensure the health and safety of its workforce; secondly, it had maximised product availability to help consumers with health and hygiene needs; and thirdly it had continued to support communities and relief agencies on the front lines of the global pandemic.
From a product standpoint, Moeller said P&G had also “raised the bar on all aspects of superiority, product package, consumer communication, retail execution and value” and made investments to strengthen the “long-term health and the competitiveness” of its brands.
“The strategic need for this investment, the short-term need to manage through this crisis and the ongoing need to drive balanced top and bottom line growth, including margin expansion, underscore the importance of ongoing productivity,” he said.
“…We believe our strategies, with the success we’ve had behind them, and an increased societal focus on health, hygiene and a clean home all bode well for the future.”
Beauty, grooming and feminine hygiene – COVID habits to stick?
Within the company’s beauty division, skin and personal care fared particularly well, driven by innovations in the US and China like the launch of Safeguard hand soap and hand sanitiser and premium launches under the Olay brand. P&G said personal cleansing had grown more than 30% in Q1 and hair care sales also continued to rise.
For grooming, appliances saw an organic sales increase of more than 30% amid increased demand for dry shaving and styling products. And in baby, feminine and family care, sales were up largely due to consumption increases with consumers spending more time at home during the COVID-19 pandemic, P&G said.
Asked by a Goldman Sachs analyst if COVID-19 consumer trends were expected to stick, Moeller said: “We do expect that there is some stickiness to new habits that are being formed, and new awareness that’s been raised. It’s hard for us to see in our interactions with consumers that we’re going to snap back and revert to the same attitudes and the same behaviours that we had collectively pre-COVID (…) Consumer habits, once they’re established in our categories, are rarely reversed. On occasion under duress they will be, but generally once people start using a category, once they form a habit, it stays.”
In terms of retail trends, he said e-commerce would continue to be an important platform for P&G, though the company preferred to remain “channel-agnostic and let the consumer make the choice”, and it would continue investing in the direct-to-consumer (D2C) channel.