P&G’S SALES UP AS CONSUMERS BRUSH OFF RISING PRICES
Additional increases expected for household and personal goods
Shoppers shrugged off rising prices last year on products like Pampers diapers and Charmin toilet paper, consumer goods giant Procter & Gamble said Wednesday in announcing a jump in its second-quarter earnings.
The company reported that price increases for products like Crest toothpaste and Tide detergent helped drive revenue 6 percent higher to $21 billion in the three months that ended Dec. 31 from a year earlier. Earnings rose 9 percent to $4.2 billion in the quarter.
The company added that it expected more price increases throughout the year, starting in February on fabric care products like Gain, Bounce and Downy. Prices for personal care products will go up beginning in April.
U.S. households have been squeezed by high inflation, which rose 7 percent in December, its highest level in 40 years. Gas prices moderated somewhat last month, but “food at home” costs
and rent have grown more expensive. As the Omicron variant of the coronavirus continues to spread, demand for at-home products will also go up as more people stay indoors.
“The products that P&G have raised prices on continue to be in demand,” said Mark A. Cohen, director of retail studies at Columbia Business School. “They can continue to pass on inflated costs
as long as demand supports it.”
Revenue for fabric and home care products, which include brands like Swiffer and Mr. Clean, rose 8 percent in the second quarter compared with last year, the company said. Beauty products, with brands like Old Spice and Herbal Essences, were up 2 percent compared with a year ago.
“We delivered very strong topline growth and made sequential progress on earnings in the face of significant cost headwinds,” said Jon R. Moeller, the company’s president and CEO.
The earnings report comes as many companies struggle to offset the costs of supply chain disruptions, which could be exacerbated by renewed lockdowns in China and worker shortages for factories, ports and trucking companies in the United States. Food manufacturers like Nestlé and Danone announced last year that they would raise prices to cover higher commodities, labor and transportation expenses.
“The recent spike in virus cases and resulting lockdowns increase the risk of additional work stoppages in our operations or in those of our suppliers,” Procter & Gamble’s finance chief, Andre Schulten, said on a conference call Wednesday, adding that the company continues to face higher diesel and freight costs.
The price to ship a 40-foot container from Asia to the U.S. West Coast hit $14,637 this week, down slightly from a peak of more than $20,000 in September, but still nearly a tenfold increase from two years ago, according to data from Freightos Group.