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Procter & Gamble (P&G) recently released its quarterly earnings report, revealing a mixed performance marked by declining demand for its products and a more pessimistic outlook for the upcoming quarter, hinting at potential price increases.
The consumer goods giant, known for brands like Tide and Charmin, has adjusted its projections for core earnings per share and overall revenue for the current fiscal year, which is nearing its end. P&G executives attributed the reduced outlook to various factors, including a slowdown in consumer spending, the imposition of new tariffs, and the company’s commitment to reinvest in its brands amid ongoing uncertainties.
Despite already manufacturing a significant portion of its products domestically, the tariffs introduced under the Trump administration are expected to increase operational costs for P&G. CFO Andre Schulten noted on a CNBC appearance that pricing adjustments are likely, partly due to the inflationary nature of tariffs, as the company explores alternative sourcing options.
Schulten indicated that anticipated price hikes related to tariffs are set to unfold in the next fiscal year, starting in July, coinciding with the expected escalation of “reciprocal” tariffs from the Trump administration, which had previously been temporarily reduced.
Following the report, P&G’s stock experienced a decline of over 4% on Thursday.
In terms of specific figures, P&G’s earnings per share came in at $1.54, slightly surpassing the analysts’ forecast of $1.53. However, revenue fell short of expectations, reported at $19.78 billion against an anticipated $20.11 billion. The company’s net sales revealed a 2% decrease, although organic sales (which exclude acquisitions, divestitures, and currency fluctuations) managed to see a 1% rise.
During this quarter, P&G’s volume sales fell by 1%, providing a clearer picture of consumer demand excluding price influences. Schulten observed that various uncertainties surrounding tariffs and the political landscape have made consumers wary, resulting in a notable shift to value-oriented shopping and an increase in online and larger-scale retailers.
According to Schulten, the current political climate and global economic uncertainties have driven some consumers to adopt a cautious “wait and see” approach, leading to decreased foot traffic in physical stores. He remarked on the tendency for consumers to seek better value, gravitating toward larger retailers and online platforms.
While discussions of market volatility and divisive global rhetoric were mentioned, Schulten clarified that P&G has not identified any significant trends of nationalist consumer behavior in markets such as Canada, Europe, and China. Still, he highlighted that current tariffs are projected to inhibit growth, potentially causing a financial impact ranging from $1 billion to $1.5 billion annually.
Looking ahead, P&G plans to mitigate these challenges through a focus on pricing strategies, productivity improvements, and innovation. Adjustments in product formulations and sourcing practices may also be explored as short-term solutions.
The company’s various segments displayed differing performance metrics. Its baby, feminine, and family care division registered a 2% decline in volume, marking the steepest drop across all categories. This segment, which includes well-known products like Pampers and Bounty, encountered volume contractions throughout the quarter.
Both the health care and fabric and home care divisions experienced a 1% reduction in sales volume during this period, with weaker demand noted for oral care items, including Oral-B toothbrushes and Crest toothpaste, as well as for home care products like Cascade and Swiffer.
The beauty division reported stable volume figures, although demand in Greater China—P&G’s second-largest market—declined. While SK-II demonstrated robust growth in the region, overall organic sales in China fell by 2%, contrasting with a 1% increase seen in North America. Schulten remarked that recovering demand in China would be gradual and not linear.
On a brighter note, P&G’s grooming segment, encompassing brands such as Gillette and Venus, was the only category to witness a volume growth of 1% during the quarter.
As P&G approaches the final leg of its fiscal year, it has revised its expectations for flat sales growth in fiscal 2025—a decrease from its earlier prediction of a 2% to 4% growth rate. The company has also adjusted its core earnings per share outlook downward, now estimating figures between $6.72 to $6.82, down from a previous forecast of $6.91 to $7.05.
For the third quarter, P&G reported a net income of $3.77 billion, or $1.54 per share, which is a slight increase from $3.75 billion, or $1.52 per share, recorded during the same period last year.
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