Procter & Gamble On Friday it reported mixed quarterly results as it struggles to win back shoppers after two years of rising prices across its portfolio, from Tide detergent to Charmin toilet paper.
The company’s prices rose 3 percent compared to the year-ago period, though Chief Financial Officer Andre Schulten said on a media call that P&G did not initiate any price increases nationwide during the quarter.
Despite its disappointing sales, the consumer giant raised its outlook for full-year earnings growth.
The company’s shares fell more than 1% in morning trading.
Here’s what P&G reported compared to what Wall Street expected, based on a survey of analysts by LSEG:
- Earnings per share: $1.52 vs. $1.41 expected
- Revenue: $20.2 billion vs. $20.41 billion expected
P&G reported third-quarter net profit attributable to the company of $3.75 billion, or $1.52 per share, from $3.4 billion, or $1.37 per share, a year earlier.
Net sales rose 1% to $20.2 billion. Organic sales, which strip out acquisitions, divestitures and foreign currency, rose 3% in the quarter.
But the company’s quarterly volume was flat for the second quarter in a row. In October, executives said they expected to return to volume growth in fiscal 2024. After three quarters, the company still hasn’t won back many of the customers it spooked with its price hikes over the past two years.
However, three of P&G’s divisions reported volume growth for the quarter. Its beauty division, which includes Olay and Pantene, saw volume increase by 1%, fueled by innovation in personal care. The company’s grooming business, home to Gillette and Venus razors, reported 2% volume growth. And fabric care and home care, which includes Febreze and Swiffer, posted 1% volume growth.
But P&G’s health care and baby, women’s and family care divisions saw further declines. The company blamed its higher prices and a weaker cold and flu season for the declines.
Geography also played a role in the company’s dismal sales. China, the company’s second-largest market, continues to see lower demand for products such as expensive SK-II skin care. Schulten also said that some markets, particularly in the Middle East, have seen retailers pull back on offers amid geopolitical tensions linked to the war in Gaza.
“The impact is visible but limited, and we expect it to diminish, obviously, hopefully, as these tensions subside over time,” he said.
In the US, P&G’s biggest market, the company’s volume rose 3%. Schulten said the American consumer is not trading down or changing shopping behavior.
“Consumers don’t want to gamble when it comes to the type of performance … they ultimately know the price to negotiate down,” he said.
For the full year, P&G now expects core net earnings per share to rise 10% to 11%, up from its previous range of 8% to 9%. The company also raised its forecast for unadjusted earnings growth to a range of 1% to 2%, from its previous forecast of a 1% decline to flat. P&G maintained its outlook for sales growth of 2% to 4% in 2024.
P&G also now expects a $900 million benefit from favorable commodity costs, compared to its previous outlook of $800 million. This is a reversal from the last two financial years, when commodity costs weighed on the company, leading to price increases.
Correction: P&G’s net sales rose 1% to $20.2 billion. A previous version incorrectly provided a number.