Procter & Gamble Quarterly earnings and earnings reported Wednesday exceeded Wall Street’s expectations as price increases helped offset widespread inflation and tight margins.
Consumer goods giants reported that one-quarter was full of economic challenges. Soaring commodities and fares have reduced the company’s profit margins, but higher prices and productivity savings have helped offset some of the decline in profits.
The company’s gross margin fell 4 percentage points year-over-year, but operating profit margin fell only 0.1 percentage points this quarter.
“Looking at the current state of the market, including imbalances in supply and demand, geopolitical turmoil, the need for supply chain turmoil, and rising energy costs due to the war between Ukraine and Russia, all of these continue to put pressure on us. I’m calling. In terms of cost. ” CFO Andre Schulten said in a phone call with journalists.
P & G said it has raised its earnings growth outlook for 2022, but expects annual earnings per core share to be at the lower end of the previous range.
The company’s stock was flat in pre-market trading.
Based on an analyst survey by Refinitiv, the company reported:
- Profit per share: $ 1.33 Adjusted vs. $ 1.29 Expected
- Revenue: $ 19.38 billion vs. expected $ 18.73 billion
P & G’s third-quarter net income increased from $ 3.27 billion ($ 1.26 per share) to $ 3.36 billion ($ 1.33 per share) in the year-ago quarter.
Excluding items, the company generated $ 1.33 per share, above the $ 1.29 per share expected by analysts surveyed by Refinitiv.
Net sales It increased by 7% to $ 19.38 billion, exceeding the expected $ 18.73 billion. The company’s intrinsic earnings increased by 10% in the quarter, although the amount of unaffected currency and price changes increased by only 3%.
“So far, the volume assumptions made earlier this year have been more conservative than those seen on the market,” Schulten said. “Since we have been pricing throughout the year, so far the price elasticity (consumer reaction to the increase we are taking) is about 20 more than we expected, based on the past. We see a% to 30% advantage. Data. “
Healthcare was the company’s highest performing division this quarter, with a 16% increase in organic sales, supported by a stronger cold and flu season and new sleep and digestive products. This segment includes Vicks and Zzz Quil cold remedies, Oral-B toothbrushes, and Crest toothpaste.
P & G’s Fabric and Home Care and its Baby, Feminine and Family Care divisions both reported 10% growth in organic sales. Fabric care, including tide detergents, showed double-digit organic sales growth as the company raised prices and offered more premium products. The baby care and feminine care segments were boosted by rising prices in addition to market growth.
The company’s grooming segment, including Gillette and Venus razors, reported intrinsic sales growth of 8%.
The cosmetology department reported the weakest growth in organic sales, an increase of only 3%. This segment, which includes brands such as Pantene and SK-II, was also the only segment to report a decline in sales volume this quarter. According to the company, hair care sales were hit by a pandemic-related decline in sales.
In 2022, P & G raised its revenue growth forecast from the previous 3% to 4% outlook to a range of 4% to 5%. The company also raised its intrinsic sales growth forecast from 4% to 5% to 6% to 7%.
P & G has repeatedly forecasted earnings per core share for fiscal year 2022, but said it expects a lower limit of growth of 3% to 6% in the forecast range due to inflation and currency headwinds. ..
We anticipate a $ 2.5 billion hit from rising commodity costs, a $ 400 million hit from rising fares, and a $ 300 million hit from foreign currency headwinds. The company has raised its full-year inflation forecast for the third consecutive quarter.