FMCG producers can barely keep up with the demand. After another quarter of growth, which was better than expected, Procter & Gamble (P&G) is now raising its prices.
Sales continue to rise
The Covid pandemic is still making people consume more at home, and FMCG producers have felt this. For four quarters in a row, Procter & Gamble has exceeded analysts’ expectations, and it was no different for the past quarter. The producer of Gilette and Dash saw sales increase by 5 per cent to 18.1 billion dollars (15.07 billion euros), despite stable volumes.
As a result, net profit rose to 3.3 billion dollars (2.75 billion euros), up 12 per cent from almost 3 billion dollars a year earlier. Per-share, adjusted profit clocked in at 1.26 dollars, an increase of 13 per cent compared to the first quarter of 2020. Analysts, on average, assumed the lower 1.19 dollars per share.
Prices are going up
Despite this higher profit margin, P&G announces an increase in its consumer prices. Strong demand continues to put high pressure on the supply chain, while uncertainty on the supply side – for instance, the ongoing pandemic and the blocked Suez cargo ship – is causing raw material prices to rise.
From September onwards, the prices of baby care, feminine care and adult incontinence products will go up. How much will vary depending on the brand, but it is expected to be between 5 and 10 per cent. Earlier, Coca-Cola, several brewing groups, and Kimberley-Clark also announced price increases to protect their margins, NBC News reported.
For the current financial year, P&G expects sales growth of between 5 and 6 per cent. A similar growth would also be achieved on an organic basis. Earnings per share should increase by 8 to 10 per cent, the company predicts. The group also plans to buy back about 11 billion dollars worth of its own shares this year, one billion dollars more than previously planned.