P&G exceeds quarterly expectations due to consistent demand and increased prices.

P&G exceeds quarterly expectations due to consistent demand and increased prices.

Procter & Gamble Beats Expectations with Strong Sales and Profit

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July 28 (ANBLE) – Procter & Gamble (PG.N) reported higher-than-expected sales and profit for the quarter, sending its shares up by about 1.5% in premarket trading. The consumer goods giant was able to benefit from multiple price hikes and strong demand for its cleaning products, paper towels, and other household items.

The positive results from Procter & Gamble, as well as other major global consumer product and food manufacturers like Unilever (ULVR.L) and Nestle (NESN.S), highlight their ability to raise prices to offset rising transportation, commodity, and labor costs. This demonstrates the resilience of these companies in managing their costs while maintaining consumer demand for their brand name products.

Investors have expressed concerns about whether recent price hikes will discourage shoppers from purchasing these products. With many consumers around the world facing high costs of living and increasing interest rates affecting household budgets, it is crucial for companies to strike a balance between profitability and affordability.

In the fourth quarter, P&G experienced a 1% drop in overall volumes, primarily in Greater China. However, the company managed to increase average prices across its product categories by 7%. In comparison, P&G had implemented a 10% price hike in the previous quarter, which resulted in a 3% decline in sales volume. These numbers indicate a strategy of gradually increasing prices to minimize the impact on consumer behavior.

Looking ahead, P&G has forecasted a profit per share growth range of 6% to 9% for fiscal year 2024. This equates to $6.25 to $6.43 per share, with a mid-point estimate of $6.34. Some analysts had expected earnings per share of $6.38. The company’s competitor, Kimberly-Clark Corp (KMB.N), also raised its annual sales and profit forecasts recently. Kimberly-Clark attributes its success to an 8% increase in product prices in the second fiscal quarter, despite a 3% decrease in sales volumes.

In addition to price hikes, P&G anticipates a net benefit of approximately $400 million after-tax from favorable commodity costs in fiscal year 2024, taking currency fluctuations into account. This further positions the company for growth and improved profitability.

For the fourth quarter, P&G reported net sales of $20.55 billion, up from $19.52 billion in the same period last year. This exceeded analysts’ expectations, which averaged $19.98 billion, according to IBES data from Refinitiv. On an adjusted basis, the company achieved earnings of $1.37 per share, surpassing estimates of $1.32.

The impressive results from P&G show its ability to adapt to market challenges and deliver strong financial performance. By effectively managing costs, raising prices strategically, and maintaining consumer demand, the company proves its resilience in the highly competitive consumer goods market. As P&G continues to innovate and invest in its product portfolio, investors can remain optimistic about the company’s future growth potential.

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