P&G records profit boost after raising marketing spend in last three months of 2020

P&G: pandemic conditions have driven increased consumption of several brands
P&G: pandemic conditions have driven increased consumption of several brands

Home care and grooming segments drive growth, as the consumer goods giant reports a 7% increase in marketing spend.

Procter & Gamble (P&G), the consumer goods giant, which owns the Ariel, Gillette, Pampers and Tide brands, reported an 8% increase in revenue, to $19.7bn (£14.3bn), and a 20% rise in operating profit for the second quarter of its financial year (October to December).

As in the case of Netflix netting millions of new homebound subscribers during the pandemic, P&G also gained from people being confined and actutely aware of hygiene and cleanliness, with segments such as fabric and home care and grooming recording sustained growth. 

The positive results also come after P&G again hiked its marketing spend.

In an earnings call, chief operating officer Jon Moeller said: "A strong support for our brands is part of our model and will continue to be part of the model, going forward. 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."

Moeller noted that ecommerce now accounts for a full 14% of overall sales and grew 50% in Q2. 

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. 

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

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

  • Beauty: Hair Care organic sales increased by 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 about 30%, driven by increased consumer demand for home cleaning products during the pandemic. Dish Care, Air Care and Surface Care each grew by the 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.

A version of this story first appeared on Campaign Asia


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