Rahul Sachitanand
Jan 21, 2021

P&G notches 20% profit increase on 8% sales growth

Home care and grooming segments drive growth, as the consumer goods giant reports a 7% increase in marketing spend in the second quarter of its fiscal year.

P&G HQ in Cincinnati, Ohio (Shutterstock)
P&G HQ in Cincinnati, Ohio (Shutterstock)

Procter & Gamble (P&G), the consumer goods giant and owner of brands such as Ariel, Gillette, Pampers and Tide, reported an 8% increase in revenue, to $19.7 billion, and a 20% rise in operating profit for the second quarter of its financial year. As in the case of Netflix netting millions of new homebound subscribers during the pandemic, P&G too gained from people being confined and actutely aware of hygiene and cleanliness, with segments such as fabric and home care and grooming seeing sustained growth. 

“We remain focused on executing our strategies of superiority, productivity, constructive disruption and improving P&G’s organization and culture," noted David Taylor, P&G's chairman, president and chief executive officer, in a statement. "These strategies enabled us to build strong business momentum before the COVID crisis, accelerated our progress in calendar year 2020 and remain the right strategies to deliver balanced growth and value creation over the long term.”

P&G raised its outlook for fiscal 2021 sales growth from a range of 3% to 4% to a range of 5% to 6%, versus the prior fiscal year. 

Given the robustness of demand, the company said it has been increasing its marketing spend, Jon R Moeller, vice chairman and COO, told analysts in a post-results call. "A strong support for our brands is part of our model and will continue to be part of the model going forward," he said. "If you look at the quarter we just completed, just in the marketing side of the equation, we increased marketing about 7% year-on-year."

In the recently concluded quarter, here are key drivers for P&G's different businesses: 

  • Beauty: Hair Care organic sales increased mid-single digits led by strong demand and retail execution in Greater China and increased pricing.
  • Grooming: Appliances organic sales increased more than 20% due to increased demand for at-home shaving and styling products and innovation, even as demand for shave care products tailed off,due to the pandemic. 
  • Health care: Oral Care organic sales increased by double digits, with high single digits or higher growth in each region, driven by innovation and growth of premium products.
  • Home Care: Organic sales increased around 30%, driven by increased consumer demand for home cleaning products during the pandemic. Dish Care, Air Care and Surface Care each grew high teens or more.
  • Baby, Feminine and Family Care:  Feminine Care organic sales increased mid-single digits, driven by growth in North America and Greater China. Also, family care organic sales increased double digits, driven by consumption increases as consumers spend more time at home during the pandemic.

In terms of geographic performance, Moeller noted in his analyst call that both US and Greater China grew at 12% in the second quarter, while data from other geographies wasn't immediately available. In addition, he also noted that ecommerce now accounts for a full 14% of overall sales and grew 50% in Q2. 

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