Procter & Gamble Co (PG.N) beat Wall Street expectations for quarterly profit on Friday as it reported its best U.S. sales growth in decades thanks to consumers stockpiling cleaning essentials in lockdowns against the coronavirus.
Laying out details of a huge surge in demand for hand soaps, Tide antibacterial spray and other detergents, Chief Financial Officer Jon Moeller said U.S. consumers stuck in their homes were doing more laundry and washing their dishes more often.
Organic sales in the United States grew 10% in the company’s third quarter to the end of March and global net sales rose about 5% to $17.21 billion.
“We’re seeing as much as a 20% increase in consumption across categories,” Moeller told a call with analysts.
One of the world’s biggest producers of consumer goods, P&G’s results come at a time of booming demand, and profound stress, for grocers and their supply chains.
Supermarkets like Kroger, Costco or Europe’s Tesco have seen a surge in sales in the month of March, but have also had to introduce limits on the number of items per customer or special hours for senior citizens.
P&G said that while everyday essentials have been in demand, sales of beauty and grooming products have dwindled as people stay indoors.
Sales at units that make well-known brands such as Bounty paper towels, Tampax tampons, Charmin toilet paper, and Pampers diapers all rose between 6% and 8%.
The net sales figures were slightly below analysts’ expectations of $17.46 billion, according to IBES data from Refinitiv. Excluding one-time items, however, P&G earned $1.17 per share, beating estimates by 4 cents.
“We were expecting more variations in results and guidance due to global coronavirus uncertainty. Instead, P&G seems to be benefiting from the solid, and often predictable, demand of household necessities,” Edward Jones analyst John Boylan said.
At a time when many companies are refusing to forecast results for the rest of the year in the face of an oncoming recession, the company cut its full-year sales growth target to 3%-4% from its prior forecast of 4%-5%.
It said that allowed for currency fluctuation; the dollar, whose strength weakens the value of P&G’s foreign sales, rose sharply in the second half of March as investors sought the security of the U.S. currency in a brutal global market selloff.
Boylan said when the crisis ends, slower sales in pantry-stocking items would be offset by higher sales in beauty and grooming categories.