may be tough on grime, but surprisingly gentle on households’ finances. The $346 billion consumer goods giant reported a 5% increase in quarterly sales on Tuesday. While the cost of making its products increased 13% in the quarter, it passed on just a 1% price increase to retailers. When the operating environment is tough, it pays to be big.
That’s not ideal for shareholders, but P&G has remained undented in some important places. Gross profit margins – an indirect sign of the premium P&G products command – are still nearly 50%. Cash flow from operations fell only slightly. With cash on the balance sheet, Taylor has been able to increase the dividend. His planned $17 billion in dividends and buybacks for the year exceeds P&G’s estimated earnings of $15 billion, according to Refinitiv.
If inflation is coming to the supermarket shelf, P&G can therefore afford not to be the main perpetrator. By sponging up input cost hikes, it could use the next several quarters to keep prices in check and gain market share from smaller firms who have been chipping away at P&G’s position. The company’s price-to-earnings ratio, at 26 times, is higher than peers like Kimberly-Clark
Bounty paper towels made by Procter and Gamble are shown for sale in Encinitas, California, April 19, 2021. REUTERS/Mike Blake- Procter & Gamble on Oct. 19 reported $20.3 billion of revenue for the three months ending Sept. 30, 5% higher than the same quarter last year. Sales in the healthcare division, which includes respiratory products, increased 8%.
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