Procter & Gamble On Friday, the group announced quarterly profits and revenues that beat analysts’ expectations, as the volume of its products increased for the first time in a year.
But looking ahead, executives warned of uncertainty caused by the war with Iran, such as its effects on the company’s input costs and consumer spending. P&G will not provide guidance for fiscal 2027 until its next earnings report in July.
“I’m very glad I don’t have to give advice today [for fiscal 2027]” CFO Andre Schulten said Friday during the company’s earnings conference call. “Because what do we know what the world will look like in three months, with what we know today? “
Despite this vagueness, the company’s shares rose more than 3% in morning trading.
Here’s what the company reported compared to what Wall Street expected, based on a survey of analysts by LSEG:
- Earnings per share: $1.59 adjusted vs. $1.56 expected
- Income: $21.24 billion versus $20.5 billion expected
P&G reported third-quarter net income attributable to the company of $3.93 billion, or $1.63 per share, compared with $3.78 billion, or $1.54 per share, a year earlier. Excluding restructuring costs and other items, the company earned $1.59 per share.
Net sales rose 7% to $21.24 billion. Organic sales, excluding acquisitions, disposals and currency effects, increased by 3%.
P&G’s volume rose 2%, marking the first time in a year that it reported volume growth across the company. The measure excludes prices, making it a more accurate reflection of demand than sales. Like many consumer companies, P&G has seen demand for its products decline as shoppers try to spend less and spend more on laundry detergent and shampoo.
“I would say right now the consumer in the United States is stable,” Schulten said on a call with media. “We see the bifurcation of consumer segments continuing.”
Despite inflation fears, consumers have not yet started stocking their pantries with toilet paper or paper towels, P&G said.
P&G’s beauty division, which includes Olay, Head & Shoulders and Pantene, was the star of the quarter, with volume growth of 5%. P&G said it saw increased volumes in its personal care, skin care and hair care categories.
The baby care, feminine care and family care segment saw its volume increase by 3%. The company has seen higher demand for its diapers and family care products, including Bounty paper towels and Charmin toilet paper.
P&G’s textile and household products division said its volume rose 2% in the quarter, fueled by higher demand in North America for its Tide detergent.
Health care and health care were the two laggards in the portfolio. The grooming segment, which includes Gillette and Venus products, saw volume fall 2%. Healthcare, home to Oral-B and Vicks, also reported a 2% decline in volume.
The company reiterated its full-year guidance for sales growth of between 1% and 5% and net earnings per share growth of between 1% and 6%.
“However, where we will land in these ranges has become more uncertain given the geopolitical dynamics in the Middle East,” Schulten said during the earnings conference call.
During the fiscal fourth quarter, P&G expects a $150 million decline due to increased costs, largely due to increased transportation costs resulting from higher fuel prices, Schulten said.
Schulten said, however, that if oil prices remained high, it would weigh on P&G’s profits. He told analysts that if the price of Brent crude oil remains around $100 a barrel, the company projects an annual after-tax headwind of $1 billion.
This increase in costs could lead to higher prices for consumers. However, P&G I said it would likely avoid direct price increases across its portfolio and instead focus those increases on higher-end products, mitigating any volume declines by relying on the current K-shaped economy in which higher-spending consumers do better.
Additionally, higher fuel prices would likely mean more budget-conscious buyers.
“It is unclear how rising gasoline and energy costs will impact near-term consumer spending in our categories,” Schulten said.
Correction: P&G reported adjusted EPS of $1.59. An earlier version of this story misstated the number.