Apr 21, 2023
Procter & Gamble boosts sales view after higher pricing drives Q3 beat
Apr 21, 2023
Procter & Gamble Co raised its annual sales forecast on Friday and beat quarterly results estimates, as the company's repeated price hikes boosted margins and offset the hit from consumers trading down to cheaper brands.
The Tide detergent maker's shares rose 1% in premarket trading, after the company also raised the upper end of its fiscal 2023 share buyback target to between $7.4 billion and $8 billion of common shares.
Products made by companies such as P&G and Unilever are usually among the last to see a slowdown in demand during economic downturns, unlike discretionary items including appliances and furniture.
These companies have hiked prices repeatedly to pass on steep input costs that stemmed from supply-chain snags and were worsened by the Ukraine crisis in 2022.
The Pantene shampoo maker reported a 3% fall in overall volumes in the third quarter, with average prices across its product categories rising 10%. P&G's gross margin in the third quarter rose by 150 basis points from year ago, with a 470-basis point boost from increased pricing.
It now expects an annual hit of about $3.5 billion related to higher commodity and freight costs, as well as negative foreign rates, compared with an earlier estimate of $3.7 billion.
The company said it expects fiscal 2023 organic sales growth of about 6%, compared with its previous forecast for a 4% to 5% increase. P&G maintained its annual earnings forecast of flat to a 4% rise and said it still expects earning-per-share results towards the lower end of the guidance range.
On an adjusted basis, the company earned $1.37 per share, beating estimates of $1.32 per share.
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