Grocery giant P&G sales rise helped by price hikes 

Helped by oral care and healthcare categories, profits surpassed estimates

Pampers is one of the products that P&G makes.

Procter & Gamble reported sales and profit that surpassed analysts’ estimates as higher prices bolstered the business despite a lower volume of products sold.

Organic sales rose 7% in the quarter to the end of September, the maker of Tide detergent and Pampers nappies, has said. 

Analysts had projected growth of 5.8%, according to data compiled by Bloomberg. 

Profit also beat estimates. In the company’s statement, chief executive Jon Moeller said P&G is on track for the higher end of its organic sales and adjusted earnings guidance in the current fiscal year.

P&G’s results underscore shoppers’ willingness to continue spending in the face of persistent inflation and economic uncertainty. 

A 7% increase in prices bolstered sales, offsetting global shipment volumes that dropped 1%. In the US, volume rose by about 3%, according to chief financial officer Andre Schulten. 

While the company is seeing broad sales strength across Europe, “we’re watching the European consumer a little bit more closely,” Mr Schulten said. “Especially savings on the balance sheet of the consumer might be dwindling,” he added. 

“The consumer continues to be remarkably resilient,” depending on their ability and willingness to spend,” Mr Schulten said. “We do not see broad trade down,” he said. 

Shipment volumes to improve

On the earnings call, Mr Schulten said that the company’s global shipment volumes will improve through this financial year.

The shares rose over 2% at one stage in the session in New York trade. P&G shares have fallen about 1% since the start of the year, trailing the performance of the S&P 500 index.

The report backs up data from the latest retail sales report, which showed robust US consumer spending in September. 

The US labour market remains relatively strong, fuelling demand, which may prompt the US Federal Reserve to raise interest rates again before the end of the year. 

Mr Schulten said P&G continues to see labour inflation: “Ensuring that we are competitive in the market requires us to increase pay, so we’re doing that.” 

P&G, which also owns the Crest toothpaste, Ariel, Bounce, and Tampax, was helped by strength in its oral care and healthcare categories. 

Foreign-currency translation will hurt results, with the impact this year expected to be about $1bn (€950m) after taxes. In July, the company predicted about a $400m impact.

While P&G is one of the best-positioned companies to deal with macro-economic volatility, it’s not immune from these pressures, RBC Capital Markets analyst Nik Modi said in a research note. 

“We expect the company’s topline will come under incremental pressure due to macro dynamics in Europe and the US,”  he said.

Gross margin was 52% in the quarter, while analysts projected 49.3%. 

The company forecast a benefit of about $800m this financial year from more favourable commodity costs. 

While energy costs are rising, resins and pulp are helping to offset that, Mr Schulten said, adding that the company is watching to see if the oil markets react to the Israel-Hamas war. 

• Bloomberg