HPPC industry remains optimistic for coming months

According to the Data Panel of ABIHPEC (Brazilian Association of The Personal Hygiene, Perfumery and Cosmetics Industry), the HPPC sector showed a 0.8% increase in revenues (ex-factory sales) in the first half of 2020, when compared to the same period of 2019.
The highlight is the month of June that recorded a 4.9% increase in sales value (ex-factory), with much of this growth pulled by the Tissue segment and what we call the "COVID-19 consumer basket", which includes alcohol in gel, soaps (liquid and bar), toilet paper, disposable tissue and multipurpose paper towels.
All these products, together, grew by 12.8% in June and 19.7% in the first half of 2020, compared to the same period of the previous year, both in sales value (ex-factory).
"Given the current moment of coping with coronavirus and the need to reinforce hygiene habits, the essentiality of these products became even clearer and consumers inserted these items into their daily lives, even stronger," says João Carlos Basilio, executive president of ABIHPEC.
Another factor of the good performance of the month of June is due to the perfumery segment, with a 20.7% increase in sales value (ex-factory), due to the strong retail promotions for Valentine's Day. Among the products directly related to the fight against coronavirus, gel alcohol stands out, which from January to June this year had a sales growth of 2,066.6%.
Items from the Tissue segment also showed significant growth in the first half of the year, totaling an increase of 21.9% (value of ex-factory sales) in the division, in which multipurpose paper towels recorded a growth of 39.5%, tissue paper of 75% and toilet paper 20.5%, all in sales values (ex-factory).
In the personal hygiene segment, liquid soap is also highlighted, a category that grew by 18.2% (ex-factory sales value).
The growth of 0.8% in revenues of the sector, between January and June of this year, reflects the changes in consumption that occurred in the time interval in which the population already met the guidelines of social isolation and also, the most critical period of the business environment to date, occurred between march and April. In view of these difficulties faced in the period, the consolidated increase in this first semester is seen by the sector in an extremely positive way.
For Basilio, in addition to the crisis installed by the pandemic and the difficult economic context of the country, the performance of the HPPC sector from January to June 2020 also reflects a lower availability of consumer disbursement, which is more prudent when making its purchasing decisions. In this context, the effects of the increased tax burden suffered by the personal hygiene, perfumery and cosmetics sector in recent years are even more significant, which has impacted the access of the final consumer to the products of the sector.
Despite the uncertainties, companies in the HPPC sector expect a better result in the second half of this year and estimate growth of 1.1% for the close of 2020, data found in the ABIHPEC Market Simulator, however, following a more restrained recovery pace, since the scenario remains quite challenging, where companies have been reviewing their plans constantly. Many companies are adopting a cautiously optimistic view of consumption in Brazil and expect sales of HPPC products to follow the general trend with growth rates for some products, especially those in the "COVID-19 consumer basket."
In 2019, the HPPC sector recorded a growth of 4.2%, reaching an ex-factory sales value of R$ 55.7 billion, a positive result even in the midst of the economic recession and the tax reality of the sector, which is today the second most taxed sector in our country. In the same year, despite economic and tax challenges, the sector generated 6 million job opportunities, recording a 4% increase in the generation of direct jobs in 2019, when compared to 2018, equivalent to 5,000 direct jobs.
Recently the CNI (National Confederation of Industry) published data from the Industrial Entrepreneur Confidence Index (ICEI) for the month of July. The data show an increase in the confidence index of industrial entrepreneurs in the segment of the manufacturing industry as a whole and, in the sector ranking, presents the HPPC sector in the first place, with an index of 56.7 points, information reads in conjunction with the cleaning products sector, a number that also corroborates the optimistic view of the HPPC sector.
In addition, when the IBGE data on the Performance of Economic Activity during the pandemic for Industrial Production were observed, the monthly change in 2020 (deseasonalized data), the comparison of June versus March, shows a drop of -13.5%.
When analyzing the performance data of the Industrial Sectors in the same period, it was observed that the manufacture of soaps, detergents, cleaning products, cosmetics, perfumery products and personal hygiene accumulated a result of a drop of -0.7%; therefore, a much less significant drop than that observed in industrial production as a whole, which again reinforces the signs of recovery in the HPPC sector.
"This potential could be better leveraged if we had a more business-friendly environment, and incentives to expand production. By generating employment opportunities, through the different channels of action, the sector provides a positive multiplier effect; moving the economy, promoting entrepreneurship and competitiveness, encouraging professionalization and generating professional self-esteem", reinforces Basilio.