procter and gamble on Friday reported quarterly profit and sales that beat analysts’ expectations as product sales volumes increased for the first time in a year.
But looking ahead, executives warned of uncertainties posed by the war with Iran, including the impact on the company’s input costs and consumer spending. P&G will not release its outlook for fiscal 2027 until its next financial report in July.
“We are very pleased that we no longer need to provide guidance today (for 2027),” Chief Financial Officer Andre Schulten said in a Friday earnings call. “Because with what we know today, what do we know about what the world will be like in three months?”
Despite the uncertainty, the company’s stock rose more than 3% in morning trading.
Here’s how the company reported compared to Wall Street expectations, based on a survey of analysts by LSEG.
Earnings per share: $1.59 adjusted vs. $1.56 expected Revenue: $21.24 billion vs. $20.5 billion expected
P&G reported fiscal third-quarter net income attributable to the company of $3.93 billion, or $1.63 per share, compared to $3.78 billion, or $1.54 per share, in the year-ago period. Excluding restructuring costs, the company earned $1.59 per share.
Net sales increased 7% to $21.24 billion. Organic sales, excluding acquisitions, divestitures and foreign exchange, increased 3%.
P&G’s sales volume increased 2%, marking the first time in a year that the company reported a company-wide volume increase. This metric does not include pricing, so it more accurately reflects demand than sales. Like many consumer companies, P&G has seen demand for its products shrink as shoppers spend less and spend more on laundry detergent and shampoo.
“At this point, I would say the U.S. consumer is stable,” Schulten said on a media call. “We expect the polarization of consumer segments to continue.”
Despite inflation concerns, consumers have not yet started stocking their pantries with toilet paper and paper towels, P&G said.
P&G’s beauty division, which includes Olay, Head &Shoulders and Pantene, was the star of the quarter, with sales up 5%. P&G said volumes increased across its personal care, skin care and hair care categories.
Volumes in the Baby, Feminine and Family Care division increased by 3%. The company believes it has seen increased demand for diapers and family care products such as Bounty paper towels and Charmin toilet paper.
P&G’s Fabrics and Home Care division reported a 2% volume increase in the quarter due to increased demand in North America for the company’s Tide detergent.
Grooming and healthcare were two laggard areas of the portfolio. Volumes in the grooming division, which includes Gillette and Venus products, were down 2%. Healthcare, home to Oral-B and Vicks, also reported a 2% drop in volume.
The company reiterated its full-year forecast for sales growth of 1-5% and net income per share of 1-6%.
“But given the geopolitical dynamics in the Middle East, where we land within that spectrum is becoming more uncertain,” Schulten said on the earnings call.
Schulten said P&G expects a cost hit of $150 million in the fourth quarter, primarily due to higher transportation costs due to higher fuel prices.
But Schulten said if oil prices remained high, it would hurt P&G’s profits. He told analysts that if Brent crude oil prices stay around $100 a barrel, the company could see an annual after-tax headwind of $1 billion.
This increased cost can translate into higher prices for consumers. However, P&G said it is likely to avoid direct price hikes across its portfolio and instead focus increases on premium products, mitigating the volume decline by leaning into the current K-shaped economy, where high-spending consumers are doing better.
Additionally, rising fuel prices are likely to make shoppers more budget conscious.
“It’s unclear how much higher gasoline and energy costs will impact near-term consumer spending in our categories,” Schulten said.
Correction: P&G reported adjusted EPS of $1.59. A previous version of this article incorrectly listed this number.
