Higher prices helped Procter & Gamble to higher quarterly profits despite a slowdown in China sales, and executives described on Friday that inflation has had a relatively limited impact on demand so far.
Chief Executive Jon Moeller alluded to “significant headwinds” the consumer goods giant was facing, including a stronger US dollar, higher costs and the turmoil from Covid, but praised the company’s performance behind well-known brands like Pampers diapers and Crest toothpaste .
The company “delivered strong top-line growth, earnings growth and a sizeable cash return for shareholders amid severe cost and operational headwinds,” Moeller said in a statement.
Profit for the company’s most recent fiscal quarter increased by $3.1 billion, up 5 percent from revenue of $19.5 billion, up 3 percent from the prior-year period.
Sales were boosted by an eight percent price increase.
But P&G executives said sales in China fell 11 percent due to Covid-19 lockdowns, with the earnings release highlighting the impact on beauty, grooming and healthcare.
As restrictions ease in China, “we are seeing a gradual return to consumer mobility,” CFO Andre Schulten said. “And that certainly helps consumption.”
Schulten said P&G has seen relatively few instances where consumers have been “traded down” for cheaper products due to inflation.
“You see consumers skimp and deplete inventory for a period of time,” he told reporters at a briefing. “But it’s more harmless than we would have expected based on historical data.”
In an interview with CNBC, Moeller didn’t rule out the possibility that the US economy could be headed for a recession, but said consumers are still showing resilience.
“We have a very strong job market. Consumer balance sheets are generally strong,” Moeller told the network. “So based on this piece that we’re seeing, things are very good at least in parts of the US economy.”
P&G’s earnings per share of $1.21 missed analysts’ expectations by two cents, while earnings slightly beat estimates.
Shares fell 4.7 percent to $141.18 shortly after the start of trading.
#Price #increases #boost #PGs #profits #sales #China
