Procter & Gamble turned in another solid quarter Wednesday as it pointed to indications that consumers are mostly sticking with leading household brands despite higher prices.
The maker of Crest toothpaste and Bounty paper towels, P&G saw a slight dip in profits due to cost pressures as it trimmed its sales forecast because of the strong dollar.
But results topped analysts; expectations as executives expressed confidence in the company’s ability to navigate what they described as a “very difficult” cost and operating environment.
“When we look at the aggregate picture, we feel very good about the consumers’ reaction to our price increases because we don’t see any major trade down,” Chief Financial Officer Andre Schulten said on a conference call with reporters.
Profits were $3.9 billion, down four percent from the year-ago period, while revenues increased one percent to $20.6 billion.
The company said its lower profit margins were the result of higher commodity and input material costs, as well as increased freight costs and spending on package reinvestment initiatives.
Offsetting these expenses were price increases across the P&G slate of goods, ranging from a six percent increase in health care to 11 percent in fabric and home care.
Overall, P&G’s prices rose nine percent, while product volumes decreased three percent.
Schulten said the breadth of P&G’s products allows it to meet consumers at “different value tiers,” meaning that wealthier consumers can opt for premium Pampers brand diapers, which are about twice the price of Luvs diapers.
In light of the strong dollar, P&G now expects sales to be down between one and three percent. In July, P&G projected fiscal 2023 sales of in-line to an increase of two percent.
Shares of P&G rose 1.6 percent to $130.45 in pre-market trading.
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