Procter & Gamble Reports Mixed Results After Price Hikes

Procter & Gamble’s recent quarterly results showed a mix of gains and setbacks. Despite facing challenges in attracting shoppers due to increased prices over the past two years, the company managed to exceed earnings expectations.

The company’s prices rose by 3% compared to the same period last year. However, P&G clarified that there were no nationwide price increases during the quarter. Despite this, sales didn’t meet expectations, causing the company’s shares to drop by over 1% in morning trading.

Key financial highlights include earnings per share of $1.52, surpassing the expected $1.41, and revenue of $20.2 billion, slightly below the expected $20.41 billion. The company reported a net income of $3.75 billion, up from $3.4 billion a year earlier, with net sales increasing by 1% to $20.2 billion. Organic sales, excluding acquisitions and currency impacts, grew by 3%.

Although P&G anticipated volume growth this fiscal year, quarterly volumes remained flat for the second consecutive quarter. However, some divisions saw growth: Beauty products like Pantene and Olay increased by 1%, grooming products like Gillette and Venus razors rose by 2%, and fabric and home care products like Swiffer and Febreze grew by 1%.

“We delivered solid sales and strong earnings growth in the third quarter despite multiple headwinds, enabling us to raise our EPS growth guidance and maintain our top-line outlook for the fiscal year. We remain committed to our integrated strategy of a focused product portfolio of daily use categories where performance drives brand choice, superiority — across product performance, packaging, brand communication, retail execution and consumer and customer value — productivity, constructive disruption and an agile and accountable organization. We are increasing investments in superiority to drive market growth and sustain strong momentum. We have confidence this remains the right strategy to deliver balanced growth and value creation.”

Jon Moeller, chairman of the board, president, and chief executive officer, via P&G press release

On the downside, health care and baby, feminine, and family care divisions experienced declining volumes. The company attributed these declines to higher prices and a weaker cold and flu season.

Geographically, P&G faced challenges in China due to softer demand for premium skincare products like SK-II. Additionally, geopolitical tensions in the Middle East led to reduced promotions by retailers. Despite these challenges, the U.S., P&G’s largest market, saw a 3% volume growth.

Looking ahead, P&G increased its full-year earnings growth outlook to 10%-11% from the previous 8%-9%. The company also adjusted its unadjusted earnings growth forecast to 1%-2% and maintained a sales growth projection of 2%-4% for 2024. Additionally, P&G expects a $900 million benefit from favorable commodity costs, up from the previous $800 million forecast.