At a time when consumers are increasingly heading outdoors and back to work again, consumer products giant Newell Brands said demand for its home, cooking and stationery products remains strong with no slowdown in sight.
This as the 120-year-old Atlanta-based firm said its sales for the three months ending March 31 rose 21 percent from a year to $2.3 billion and that it also felt confident enough to raise its full revenue target by about 5 percent to as much as $10.1 billion.
Newell said sales were led by the 39 percent advance in its Home Appliance unit, which includes Crock Pot, Mr. Coffee and Sunbeam brands, as well as 34 percent gain in Home Solutions, which includes Rubbermaid storage products and Ball jars.
The company also said its Learning & Development unit sales rose 17 percent on strong demand for classroom staples like Sharpie markers and Elmer’s glue.
It’s two other categories, Commercial Solutions and Outdoor & Recreation, posted sales increase of 14 percent and 9 percent respectively.
“Each of our business units and geographic regions delivered significant sales growth, fueled by consumption, as our supply chain teams operated with excellence and successfully managed broad-based demand surges,” said Newell Brands President and CEO Ravi Saligram. “We are still in the early stages of realizing the full potential of our business and see tremendous opportunity for value creation through focused execution of our strategic priorities, including sustaining top line growth, strengthening our brands through insights and innovation, driving omni-channel prowess, unlocking international potential, and expanding distribution.”
Rising Costs
Like all manufacturers Newell is facing a swirl of rising materials costs and other inflationary pressures, but the firm is confident it can manage the rising expense pressure and still deliver higher sales and earnings.
“Significant out-performance on top line, in combination with productivity gains and operating leverage, drove outstanding results in the first quarter,” Newell CFO Chris Peterson said. “Much stronger than anticipated results thus far in 2021 give us confidence to raise our outlook for the full year both on top and bottom lines, despite additional inflationary pressures,” he added, in pegging core sales growth of 5 to 7 percent for the remainder of 2021.
Although Newell’s Q1 operating profit doubled and earnings per share tripled from a year ago, Peterson said profit margins actually slipped about 1 point during the quarter to 31.9 percent “as inflation, particularly related to resin, transportation and labor, more than offset the benefit from fuel, productivity savings and pricing.”
For the current quarter, which ends June 30, Newell is projecting that its sales growth rate will range from 17 to 20 percent in Q2 versus a year ago, and roughly in line with the 21 percent pace it just delivered in Q1.
Shares of Newell have risen about 90 percent over the past year, giving the company a market value of approximately $12 billion.
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