Con$umer crunched
P&G results strong — due to consecutive price hikes
US shoppers are paying steep prices for everyday products such as Tide detergent, Gillette razors and Oral-B toothpaste — a trend that drove strong quarterly sales for parent company Procter & Gamble, according to results released Friday.
The consumer-goods giant said it boosted prices by 10% across its various brands for the three months ending March 31, with the largest increases impacting products in the fabric and home-care category.
It was the second straight quarter of double-digit hikes for Procter & Gamble compared with pricing levels one year earlier. American households are footing the bill for lingering inflation as various companies pass along their higher costs to the public.
P&G’s CFO Andre Schulten said the company delivered strong results despite what was “still a challenging cost and operating environment.”
“The US consumer is holding up well,” Schulten added during a Friday earnings call.
Inflation has cooled since hitting a peak of 9.1% last summer, though it continues to weigh on household budgets. The Consumer Price Index rose by 5% year-over-year in March — its smallest increase in nearly two years, but still much higher than the Federal Reserve’s 2% target.
The Cincinnati-based firm’s third-quarter results topped Wall Street’s expectations. Net sales jumped 4%, to $20.1 billion, topping the $19.32 billion projected by analysts polled by Refinitiv. Net income was $3.42 billion, or $1.37 a share, beating an expected $1.32.
The company also boosted its outlook for 2023, predicting fiscal 2023 organic sales growth of 6%, up from an earlier projection for a 4% to 5% increase.
Shares of P&G rose nearly 4% in Friday trading on the strong results.
Sales were strong even though inflation-weary consumers bought fewer Procter & Gamble products.
“A concern for the company, which is taking price globally including the US, is at what point do we see [consumer demand] not work in their favor,” Samantha Palm, a portfolio manager at San Franciscobased Parnassus Investments, told Reuters.
“It’s not that we’re saying taking price is not justified, but taking price in what could be a recessionary environment in 2023, 2024 could have implications for consumers.”