Procter & Gamble (P&G) has expressed confidence in achieving the upper end of its annual sales and profit forecasts, leveraging consumers’ willingness to accept higher prices for personal care and cleaning products. The company has exceeded expectations for its first-quarter results, noting that while several rounds of price increases have impacted sales volumes, the situation is stabilizing, and the trend is expected to be positive for the remainder of the year.
P&G’s finance chief, Andre Schulten, commends consumers for their remarkable resilience and indicates that the company has no immediate plans for aggressive promotions, as there has been no significant shift in consumer choices. Consumers, in fact, appear to be trading up within P&G’s product portfolio.
The combination of price hikes, decreasing commodity costs, and a more stable supply chain has led to a recovery in the company’s gross margins. Despite a stronger dollar, the gross margin expanded by 460 basis points to 52% in the quarter.
P&G’s shares received a boost of more than 2% as the company’s determination to achieve the upper end of its annual forecasts, despite potential adverse effects from foreign exchange rates, resonated with investors.
P&G, known for popular brands like Gillette, Oral-B, and Dawn, saw its U.S. sales volumes increase by 3% in the quarter ending September 30. Prices across the board increased by 7%, while total sales volume decreased by 1%. The company anticipates that the benefits from price hikes will gradually diminish as the year progresses.
Notably, P&G reported no significant resistance from retailers regarding pricing adjustments. The company’s favorable performance suggests that consumer sentiment remains reasonably stable.
However, in China, P&G faced a «soft and choppy» market due to weak consumer confidence. Nevertheless, P&G is optimistic about the market’s return to mid-single-digit growth in the near future.
In terms of fiscal year 2024, P&G expects sales growth in the range of 2% to 4%, compared to its previous estimate of a 3% to 4% increase, primarily due to currency fluctuations.
P&G’s consistent ability to surpass market expectations for sales over the past three years highlights its resilience and consumer appeal. In the first quarter, the company reported net sales of $21.87 billion, exceeding estimates, and per-share profit of $1.83, also surpassing expectations.
