Procter & Gamble (P&G) released less than encouraging quarter results on Friday, as it struggles to regain customers subsequent to a two-year period of raising prices on products ranging from Tide detergent to Charmin toilet paper. While the company’s prices were up 3% compared to the same period last year, it was noted by CFO Andre Schulten that P&G did not increase prices nationwide within this quarter.
Despite lackluster sales, P&G has raised its full-year earnings growth outlook. The company shares, however, fell over 1% in morning trade.
Impressively, the firm reported a net income attributable to the company at $3.75 billion, or $1.52 per share, in the fiscal third quarter, a raise from $3.4 billion, or $1.37 a share, recorded a year earlier. P&G’s net sales increased by 1% to a total of $20.2 billion. This included organic sales – minus acquisitions, divestitures, and foreign currency effects – which increased by 3% over the quarter.
Unfortunately, the company faced flat quarterly volumes for the second successive quarter. P&G had earlier predicted a return to volume growth within the fiscal year 2024. After three quarters, P&G has struggled to win back a significant number of customers who were deterred by the price increases implemented over the past two years.
Positive signs were seen in three of P&G’s divisions which all reported volume growth during the quarter. Its beauty segment, including brands such as Olay and Pantene, experienced a 1% rise in volume, driven by innovation in the personal care sector. It is also noteworthy that the company’s grooming business, which houses Gillette and Venus razors, reported a 2% volume growth. Fabric and home care, including Febreze and Swiffer, enjoyed a 1% growth in volume as well.
Regrettably, P&G’s health care and baby, feminine and family care divisions reported further drops in volume. The increases in product prices and a weaker cold and flu season were cited as reasons for the decline in these areas. Geographic factors have also impaired the company’s sales performance. China, P&G’s second-largest market, continues to report weaker demand for its high-end products, like the SK-II skin care range. It was also observed that some markets, especially in the Middle East, have seen retailers cut back on promotions amid geopolitical tensions tied to the conflict in Gaza.
However, positive growth was recorded in the U.S., P&G’s largest market, where the company’s volume grew 3%.
Looking forward, P&G is eyeing a 10% to 11% growth in the core net earnings per share for the full year, up from its prior prediction of 8% to 9%. The company also lifted its forecast for unadjusted earnings growth to a range of 1% to 2%, up from its previous forecast of down 1% to flat. Commodity costs, which have put a strain on the company in the previous fiscal years leading to price increase, are now expected to yield a $900 million benefit, up from the earlier forecast of $800 million.
