Procter & Gamble (NYSE: PG), raised its full-year sales forecast for the second time following its recent second quarter earnings report, citing coronavirus pandemic demand for cleaning products. However, the consumer products company forecasts that sales will slow as the coronavirus vaccine becomes more available.
The company reported an 8% rise in organic sales growth for the second quarter, a bit lower than the 9% rise in the first quarter, but demonstrating the continued high demand. P&G believes that because of the pandemic, Americans are cleaning and sanitizing their homes by more than 30% compared to pre-pandemic levels. During the quarter, consumers purchased more of the company's brands of dish soaps, paper towels and air fresheners by 15%, 15%, and 20%, respectively.
Organic sales growth in the company's other segments: Beauty increased 5%, backed by demand for hand soap and hand sanitizer; Grooming rose by 6%; Health Care gained 9%; Baby, Feminine and Family Care was up 6%.
Additionally, since consumers are spending increased amounts of time indoors behind television and computer screens, P&G has decided to spend more time and investment into advertising their products. Because there is a much higher demand for cleaning products now more than ever due to the coronavirus, P&G would like to take advantage of the opportunity to feature its products and create more brand recognition for.
During the year of 2021, P&G predicts the sales growth to go up by 3% or 4%, up from its prior forecast of 1% to 3%. The company also raised its revenue forecast to a rise of 4% to 5%, higher than its previous predictions of 2% to 4%.
"This is not the time to step back," said John Moeller, chief financial officer and chief operations officer, on CNBC's "Squawk Box." Moeller believes that that there will be less of a demand, however, for some of P&G's products as the coronavirus vaccine becomes more widely available. That's when other other products that have been less popular lately will experience a "bounce back," according to Moeller.
P&G will also buy back up to $10 billion worth of its stock throughout the year, increasing its earlier target of $7 billion to $9 billion.