(Reuters) -Procter & Gamble bumped up its annual sales forecast on Wednesday, as the consumer goods giant benefits from higher prices and resurgent cleaning products demand amid a spike in COVID-19 infections.
The company’s shares rose nearly 2% in premarket trading as strong quarterly sales helped cushion the blow from a bigger-than-previously forecast increase in annual freight and commodity costs.
Sales of fabric & home care products, including Tide and Mr. Clean, rose 7% in the second quarter, as the rapid spread of the Omicron coronavirus variant led consumers to buy more cleaning products.
A more intense flu season also drove organic demand for personal health care products up 20%.
This, along with price hikes to offset higher commodity and freight costs, boosted net sales by 6% to $20.95 billion. Analysts had expected $20.34 billion, according to Refinitiv IBES data.
Inflationary pressures are expected to continue for a while, P&G’ finance chief said after the company forecast a hit of $2.8 billion from commodity, freight and foreign exchange headwinds this year, up from $2.3 billion expected earlier.
P&G also raised its fiscal 2022 organic sales growth forecast to between 4% and 5%, from 2% and 4% earlier, and said it would buy back $9 billion to $10 billion worth of shares, compared with $7 billion to $9 billion expected earlier.
P&G also eased speculation that it could be interested in buying GlaxoSmithKline’s consumer health business, which has drawn interest from European peer Unilever.
In a CNBC interview, CEO Jon Moeller said he was “very happy with its current portfolio” and saw no need for a large acquisition.
On Saturday, GSK rejected Unilever’s $68.4 billion offer for its consumer arm, calling it undervalued and saying it would stick to plans for a separate listing of the entity this year.
(Reporting by Uday Sampath and Siddharth Cavale in Bengaluru; Editing by Maju Samuel)