Procter & Gamble (PG) earnings in third quarter 2022

Procter & Gamble on Wednesday reported quarterly earnings and revenue that topped Wall Street expectations as price increases helped offset widespread inflation and a margin squeeze.

The consumer goods giant reported a quarter full of economic challenges. Increased raw material and freight costs lowered the company’s margins, but higher prices and productivity savings helped to offset some of the burden on profits.

P & G’s gross margin fell 4 percentage points compared to the same period last year, although the operating margin fell only 0.1 percentage points in the quarter.

“If we look at the current situation in the markets – the imbalance between supply and demand, geopolitical disruption, the need to disrupt supply chains, higher energy costs due to the war between Ukraine and Russia – all this will continue to put pressure on the cost side,” he said. CFO Andre Schulten during a conversation with journalists.

Despite raising its expectations for revenue growth in fiscal year 2022, P&G said it expects its core earnings per share to fall. share for the year will be at the lower end of the previous range.

The company’s shares closed on Wednesday with more than 2 per cent.

Here’s what the company reported compared to what Wall Street expected, based on a survey by analysts from Refinitiv:

  • Profit per. shares: $ 1.33 adjusted vs. $ 1.29 expected
  • Income: $ 19.38 billion against $ 18.73 billion expected

P&G reported third-quarter net tax revenue of $ 3.36 billion, or $ 1.33 per share, up from $ 3.27 billion or $ 1.26 per share a year earlier.

Excluding goods, the company earned $ 1.33 per. share, which peaked at $ 1.29 per share. stock that analysts had expected from Refinitiv.

Net sales rose 7% to $ 19.38 billion, beating expectations of $ 18.73 billion. The company’s organic revenue increased 10% during the quarter, although the volume, which removes the effect of currency and price changes, increased only 3%.

“So far, our volume assumptions, as we did during the year, were more conservative than what we see in the market, and they are playing out,” Schulten said. “As we have taken pricing over the year, we see so far that the price elasticities – the consumer reaction to the increase we are taking – are about 20% to 30% more favorable than we would have assumed, based on historical data.”

Healthcare was the best division for the company this quarter with 16% organic sales growth, helped by a stronger cold and flu season and new sleep and digestive products. The segment includes Vicks and ZzzQuil cold medicine, Oral-B toothbrushes and Crest toothpaste.

P & G’s substance and home care and its baby, feminine and family care divisions both reported 10% organic sales growth. Fabric care, which includes Tide detergent, saw a double-digit increase in organic sales as the company raised prices and offered more premium products. The baby and feminine care segments also received a boost from higher prices, in addition to market growth.

The company’s grooming segment, which includes Gillette and Venus razors, reported organic sales growth of 8%.

Its beauty division experienced the weakest organic sales growth with an increase of only 3%. The segment, which includes brands such as Pantene and SK-II, was also the only one to report declining volume for the quarter. The company said sales of hair care were hit by Covid pandemic-related slowdowns in volume.

For the financial year 2022, P&G raised its forecast for revenue growth to a range of 4% to 5%, up from its previous outlook of 3% to 4%. The company also raised its forecast for organic sales growth to a range of 6% to 7% from a range of 4% to 5%.

P&G reiterated its forecast for core earnings per capita. share for the fiscal year 2022, but said they expect the lower end of its expected range of 3% to 6% growth, citing inflation and currency headwinds.

It predicts a hit of $ 2.5 billion from higher commodity costs, $ 400 million from increased freight costs and $ 300 million from headwinds in foreign currency. This marks the third quarter in a row that the company has raised its inflation forecast for the full year.

Read the full earnings report here.

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