Clean Break

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What's going on?

Procter & Gamble (P&G) announced better-than-expected quarterly earnings on Tuesday, proving that – wow! – its home care range really does get sparkling results every time!

What does this mean?

One year into the pandemic and P&G’s results suggest we’re still committed to sprucing up our homes and hairdos alike. It’s those segments that did particularly well for the consumer staples giant, driving strong results even as its beauty and family care units missed the mark. And those uneven gains aren’t just expected, they’re why investors are so keen on P&G in the first place: that diversified business model has seen the company latch onto pandemic-driven trends in the last twelve months, and should see it adapt to post-pandemic trends too – whatever they might be.

Why should I care?

The bigger picture: Price hikes are coming.

Investors were also focused on P&G’s admission that it’d need to balance out the rising prices of raw materials by hiking the prices of its products. It’s the third big consumer firm to clamp down after Coca-Cola and Kimberly-Clark’s announcements earlier this month, and the move might add to the mounting evidence that inflation is on its way. That’s a scary prospect for investors: central banks are more likely to raise interest rates if prices are rising too quickly, which could hurt company earnings and, in turn, drive stocks lower.

Zooming out: Veganism is the future.

Talking of consumer staples, France’s Danone posted weaker results on Tuesday as the pandemic continues to dent demand for bottled water and baby food. The world’s biggest yogurt maker might want to take a leaf out of Oatly’s book: the plant-based rival officially filed to list on the stock market earlier in the week, and its paperwork revealed that the company’s sales more than doubled last year. In other words, vegan products are only getting more popular – and incumbents like Danone might want to play catch-up.

Originally posted as part of the Finimize daily email.

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