P&G's First-Quarter Earnings

P&G's First-Quarter Earnings

almost 4 years ago2 mins

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Consumer goods giant Procter & Gamble (P&G) – the maker of Charmin toilet paper – announced a higher-than-expected quarterly profit on Friday, and relieved investors really seemed to give a... hoot 🧻

What does this mean?

As you’d probably expect given consumers’ panicked stockpiling ahead of coronavirus-driven lockdowns, P&G’s healthcare, home care, and family care items proved incredibly popular last quarter: it sold about 8% more of them than the same time last year. And while the company fell just short of investors’ (arguably over-optimistic) revenue expectations, it did manage to deliver a prediction-beating profit thanks to the high profit margins of its in-vogue products.

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What’s more, with one quarter left in P&G’s financial year (it thumbs its nose at the Gregorian calendar), the consumer products giant was able to do something most others couldn't: maintain its profit forecast for the remainder of its year. Hallelujah 🙌

Why should I care?

Stocks in so-called “defensive” industries – like consumer staples – have been recommended by analysts and favored by investors lately, since their everyday essentials attract buyers no matter the economic weather. And those investors were rewarded: P&G announced a 6% increase to its dividend and on Friday said it might keep repurchasing its shares. So far the company’s bought back $7.4 billion of stock – and it’s said it’s prepared to buy up to $8 billion worth.

Of all the defensive companies, major American ones are particularly appealing to investors in times of uncertainty. But be warned: so is the US dollar, and investors looking for safety pushed its value up last quarter 💸 That means any money a company earns abroad is worth less when it’s brought back Stateside – which is bad news for the likes of P&G, whose sales come all over the world. And it was that very phenomenon that knocked 2% off the company’s sales growth last quarter, much to some analysts’ disappointment.

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