Procter & Gamble on Tuesday reported quarterly earnings and revenues that beat analysts’ expectations, but higher costs impacted the company’s bottom line.
The consumer giant also raised its forecast for goods and freight spending for the rest of the fiscal year, warning that it believes inflation will continue to rise.
The company’s shares fell 1.7% in the premarket.
Here’s what the company said compared to Wall Street’s expectations, based on a survey by Refinitiv analysts:
- Earnings per share: $ 1.61 versus $ 1.59 expected.
- Revenue: $ 20.34 billion vs. $ 19.91 billion expected
P&G reported fiscal first quarter net income of $ 4.11 billion, or $ 1.61 per share, up from $ 4.28 billion, or $ 1.63 per share, a year earlier. Analysts polled by Refinitiv had expected earnings per share of $ 1.59.
Net sales rose 5% to $ 20.34 billion, beating expectations of $ 19.91 billion. Organic revenue, excluding acquisitions, sales and foreign exchange, increased 4% for the quarter.
Price increases for certain P&G products, such as Pampers diapers, boosted sales organically by 1%. Higher prices offset higher transportation costs during the quarter, but were unable to keep up with rising commodity prices. P&G CFO Andre Schulten told the Wall Street Journal that the company will raise prices for even more essential commodities to cope with inflation.
P&G said it now expects $ 2.1 billion in after-tax commodity costs and $ 200 million in shipping costs to impact its fiscal 2022 results. Last quarter, the company predicted that commodity and freight costs would cut its profits by $ 1.9 billion.
Healthcare was the most efficient segment of the company this quarter. The division, which includes brands such as Oral-B and Vicks, posted organic sales growth of 7%.
In the company’s largest segment, textiles and home care products, sales grew organically by 5%. The division includes Tide, Febreze and Mr. Clean.
P & G’s grooming business, which includes Venus and Gillette razors, posted 4% organic sales growth during the quarter.
The organic revenues of the beauty and childcare divisions, womens and family children grew by 2%. The cosmetics segment, which includes Pantene and SK-II, has seen growth in organic sales in the hair, skin and personal care divisions driven by increased volumes and innovations in hair care and conditioners. P&G said more consumers are buying Pampers premium diapers and pants in the childcare segment, but organic sales of Charmin toilet paper and Bounty paper towels have dropped as the company spent more on promotions.
Despite higher costs, P&G reiterated its previous profit and revenue guidance for the year. P&G calls for a 2-4% increase in sales in the fiscal year over the prior year, as well as a 3-6% increase in core EPS.