CINCINNATI — Procter & Gamble Co. exceeded Wall Street expectations with its best sales performance in 20 years. But it also warned investors that inflation and global turmoil could lead to price increases and eat into profits.
In the last year, P&G has announced price increases in all 10 of its product categories. And it plans to boost prices on home-care products in June, feminine care and oral care in July.
“We've seen continued cost increases in nearly every type of material we use and in diesel and in natural gas,” Chief Financial Officer Andre Schulten told Wall Street analysts in its April 20 earnings call. “We are offsetting a portion of these cost pressures with price increases and with productivity savings.”
P&G reported a $3.36 billion profit in its fiscal third quarter, which ended March 31. Net sales increased 7% to $19.4 billion. Both its sales and profit numbers were better than Wall Street forecasts.
P&G said its current fiscal 2022 outlook includes headwinds of $2.5 billion after-tax from higher commodity costs, $400 million after-tax from higher freight costs and $300 million after-tax from negative foreign exchange impacts.
“Just as we've done over the past year, we'll look to couple price increases with new innovation that offers our consumers more value,” Schulten said.
P&G said COVID-19 lockdowns caused sales to decline by roughly 5% in China, but Europe and Latin America saw double digit growth in the last quarter. And CEO Jon Moeller told analysts there remains plenty of room for P&G to boost sales by focusing on product innovations that convince consumers P&G brands are worth a higher price.
“We’re still racing to catch up with demand in our largest market, the U.S.,” Moeller said. “We're not fully supplying the market's demand.”