Procter & Gamble reported its biggest U.S. sales gain in decades on Friday amid increased demand for household staples ranging from toilet paper to laundry detergent due to coronavirus lockdowns.
P&G’s organic sales increased 10% in the U.S. in the third quarter and 6% overall, with its business units that make well-known brands such as Bounty paper towels, Charmin toilet paper, and Pampers diapers showing particularly strong growth.
The company is the first major maker of household staples to report financial results since the coronavirus pandemic that initially ravaged China spread worldwide.
“The strong results we delivered this quarter are a direct reflection of the integral role our products play in meeting the daily health, hygiene, and cleaning needs of consumers around the world,” CEO David Taylor said in a news release.
P&G shares rose 1.5% to $123.28 in trading Friday as the company also cut its revenue forecast for fiscal 2020, citing currency headwinds. It now expects sales will rise 3% to 4%, down from a prior range of 4% to 5%.
CFO John Moeller said the coronavirus pandemic could spark permanent changes in consumer demand for certain products as Americans spend more time at home and place a greater priority on cleaning.
“We will serve what will likely become a forever-altered health, hygiene, and cleaning focus for consumers who use our products daily or multiple times each day,” he told CNBC.
P&G’s strongest third-quarter sales growth was in its health care division, up 9%, and fabric and home care unit, up 10%. Consumers are doing more weekly loads of laundry with more items of clothing being washed after being worn once, according to Moeller.
The grooming business, which includes shaving products, was the only P&G segment to report a decline in organic sales.
“The big question facing P&G is how the company will fare in an economic downturn,” MarketWatch said. “P&G’s lineup is dominated by higher-end products, and premium offerings from all-natural diapers to high-tech razors have buoyed results in recent years.”
Net sales for the quarter rose 5% to $17.2 billion while diluted net earnings per share were $1.12, up 8%.
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