Procter & Gamble Posts Biggest Yearly Sales Gain Since 2006
According to The Wall Street Journal, Procter & Gamble, “maker of household staples from Tide detergent to Charmin toilet paper, posted its strongest annual sales gain since 2006 as the pandemic kept the world’s consumers at home and vigilant about cleaning.”
US demand “for cleaning and paper products continued to surge through the spring and early summer, while the reopening of China, P&G’s second-biggest market, drove sales there,” wrote The Journal. “P&G executives said the company’s efforts in recent years to overhaul itself by shedding weaker brands and streamlining what they described as an often suffocating bureaucracy are paying off at a time of crisis.”
The “Cincinnati company’s organic sales were up 6% for the fiscal year ended June 30. For the latest quarter, organic sales also rose 6%,” the report said.
“On the whole, with health, hygiene and cleaning, consumers’ needs have changed forever,” Chief Financial Officer Jon Moeller said. “Maybe not to the degree that’s happened recently. But it’s hard to imagine we’ll snap back to the old world.”
The strongest growth was in P&G’s “fabric and home-care unit, which posted a 14% sales gain, its highest ever. The unit’s brands include Tide along with Mr. Clean, Dawn dish soap and Cascade dishwasher detergent,” The Journal reported.
P&G has “yet to show signs of being negatively affected by the recession, as consumers remain willing to pay higher prices for its products,” The Journal continued. “A question facing the company, given that its products are generally more expensive than rival brands, is whether it would fare better in an economic downturn than it did during the last recession, when sales growth plunged to anemic levels and took a decade to recover.”
“We expect that if this gets longer and deeper, people will have to make choices,” P&G Chief Executive David Taylor said. “The good news is that, unlike last time, we have a broader portfolio.”
Price increases continued to “help drive sales gains in the most recent quarter, with sales volumes also growing stronger in recent months. Before the pandemic, consumers proved willing to buy without discounts the more-expensive products it has developed,” the report stated. “Those price increases continued through the most recent quarter and helped offset losses due to currency moves.”
“P&G kept all its U.S. manufacturing operations running through the pandemic, and employees have since returned to work at product-development facilities and in offices, though at much reduced levels,” The Journal wrote.
Taylor said operating in the pandemic “demonstrated that the company had room to improve productivity even after a major restructuring, noting that some factories were at times able to operate at 90% capacity even with staffing levels cut in half,” the report added. “There’s more there,” Taylor said.