almost 2 years ago • 3 mins
Procter & Gamble (P&G) reported better-than-expected quarterly results on Wednesday, after a few of its signature heroes showed just how well they scrub up.
What does this mean?
Shoppers might've been under the weather last quarter, but P&G was fighting fit. The company’s cold and flu products flew off the shelves, which helped its healthcare segment – home to brands like Oral-B and Vicks – make 13% more in sales last quarter than the same time last year. And sales in P&G’s fabric and homecare segment – the firm’s biggest – were up 7% too, after folk stocked up on cleaning products like Tide detergent and Mr Clean during an Omicron spike.
Altogether, P&G’s organic sales – which strip out the impact of currency swings and acquisitions – were 10% higher last quarter than the same time last year, marking the company’s biggest quarterly gain in 20 years. P&G upped its full-year revenue growth outlook too, and investors sent its shares up after the news.
Why should I care?
For markets: P&G, no matter what.
There’s another reason investors are keen on P&G: as a consumer staples company, it can raise prices without losing customers – a handy tool when costs are on the rise. Case in point: P&G increased its average product price by 5% last quarter, yet still sold 3% more. That “pricing power” could be why an index tracking some of America’s biggest consumer staples companies has outperformed the US market by 10% this year. And what’s more, research shows the sector has outperformed the wider market by 15-20% during uncertain economic times over the last 20 years.
Zooming out: There’s money in yogurt.
P&G isn’t the only consumer staples company raking it in: Danone reported on Wednesday that last quarter’s sales were up by 7% versus the same time last year – its fastest sales growth since 2014. The French firm said its price hike drove the boost, along with strong demand for essentials like baby products and bottled water.
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Carmakers just can’t get through a single day unscathed: data out on Wednesday showed that European car sales fell for the ninth straight month in March.
What does this mean?
European carmakers have been battling supply shortages for months, and war in Ukraine has only made things worse. The conflict’s sent more shockwaves through Europe’s supply chains, leaving even the region’s biggest carmakers struggling to keep up with demand. That’s showing up in their sales: Mercedes, BMW, and Volkswagen sold 18%, 23%, and 25% fewer cars last month than the same time last year. In fact, all four major European markets – Germany, France, Spain, and Italy – recorded fewer registrations last month versus the same time last year. That meant total European car sales fell by 19% last month, resulting in an 11% drop over the whole first quarter. And there might be another problem ahead: forecaster LMC Automotive reckons that by the time parts are readily available again, high inflation could swoop in to hit demand.
Why should I care?
The bigger picture: Pay up, drivers.
Those supply issues have increased the average cost of electric vehicle (EV) batteries by over 50% in the last year alone. And while EV makers have simply been passing those higher costs onto customers, that doesn’t seem to have put buyers off yet: data out this week showed global EV sales more than doubled last quarter from the same time in 2021.
Zooming out: The future’s electric.
Analysts reckon the EV boom is here to stay, especially as continued investment in the space should bring costs back down. Just look at the world’s two biggest EV battery makers: CATL and LG Energy Solution separately announced they’ll invest $6 and $9 billion toward building mines-to-manufacturing battery supply chains in resource-rich Indonesia. The move should help them reduce their reliance on Chinese suppliers, while limiting their exposure to volatile material prices following the war in Europe.
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