Source : 'HBW Insight'
Procter & Gamble says it is pushing forward, not pulling back in response to 2020 challenges, and the firm is seeing good momentum in the first two months of the new fiscal year.
The Cincinnati, OH-based company is rolling off a strong fiscal 2020, ended on 30 June, in which its net sales increased 5% reported, or 6% organic, to $71bn for the year, driven by increased consumption of home, health and hygiene products, which will remain P&G’s primary focus.
Presenting on 10 September at the Barclays Global Consumer Staples Conference, chief financial officer Jon Moeller noted the strength of P&G’s US business in particular, which accelerated during the COVID crisis to end FY 2020 at 10% growth. ("PGs Fourth Quarter Held Back By Grooming Beauty While Fabric Home Care Cleans Up" "HBW Insight" )
The business is still going strong, increasing 10% and 12% in the past three months and one month, respectively, Moeller said.
P&G CFO Jon Moeller
Going forward, P&G is projecting 4% to 6% sustainable organic growth in the US, recognizing that when government stimulus checks run out, and depending on the unemployment picture, among other uncertainties, trends could change.
However, the firm is confident in its prospects.
“Consumption of our products is not likely to dissipate. In fact, the relevance of our categories in consumers' lives potentially increases. 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,” Moeller said.
Consumers’ increased time at home has meant greater attention to domestic needs, which is driving sales in P&G Fabric Care (eg, Tide, Downy, Era, Gain), Family Care (Bounty, Charmin, Puffs) and Home Care (Cascade, Comet, Dawn, Febreze, Joy).
Meanwhile, the firm’s Safeguard and Ivory are among brands benefiting from increased demand for personal cleansing products.
"There's a silver lining in this thing. It stretched us and taught us that there's much more available.”
P&G has increased its household penetration with low- and middle-income consumers during the pandemic.
“Most of our categories serve health, hygiene and home cleaning needs of consumers. And those are elevated [currently] regardless of your income level,” he said. “And then as those needs are heightened, there's a migration to brands that I know and trust to take care of me and my family. And that has an impact on household penetration of our brands and products.”
Whether or not the gains will prove “sticky” if the recession deepens remains to be seen. But P&G believes consumers may experiment less for the foreseeable future, choosing instead to rely on established, reputable, superior-performing brands – and continue doing more of their shopping online – which makes the firm confident in its position.
P&G also is learning how to stretch limited resources for optimal output, which bears on tomorrow’s productivity, Moeller suggested.
“We've operated for long periods of time, months, with 90% throughput in our manufacturing facilities, 90% to 95% on-shelf availability, with at times 50% of our pre-COVID resources, simply because people were unable either for family reasons or for regulatory reasons or for health reasons to get to work. That's not sustainable on a going basis, but do we snap back to 100%? No. And are there learnings within that? Absolutely,” the CFO said.
He cited digital specifically as an area where P&G has learned to do more with less.
He concluded, “There's a silver lining in this thing, and I certainly don't want to minimize any degree of human suffering that's occurred as a result of this. But it stretched us and taught us that there's much more available.”
By Ryan Nelson