Price hikes boost P&G profits

Higher prices helped Procter & Gamble score increased quarterly profits despite a hit to China sales, and executives on Friday described inflation as having a relatively limited impact thus far on demand.

Chief Executive Jon Moeller alluded to “significant headwinds” faced by the consumer products giant including a strengthening US dollar, higher costs and Covid upheaval, but praised the performance of the firm behind well-known brands like Pampers diapers and Tide detergent.

The company “delivered strong top-line growth, earnings growth and significant cash return to shareholders in the face severe cost and operational headwinds,” Moeller said in a statement.

Profits in the final quarter of the company’s fiscal year rose $3.1 billion, up five percent on revenues of $19.5 billion (£16.07bn), which were three percent higher than the year-ago period.

Sales were boosted by an eight percent increase in pricing.

However, P&G executives said sales in China suffered an 11 percent hit due to Covid-19 lockdowns, with the earnings release highlighting the impact in beauty, grooming and health care.

With restrictions in China easing “we are seeing a gradual return to consumer mobility,” said Chief Financial Officer Andre Schulten. “And that is certainly helping consumption.”

Schulten said P&G has seen relatively little incidence of consumers “trading down” to lower-priced products because of inflation.

“You see consumers may be skimp for a period of time, use up inventory,” he told reporters on a briefing. “But it’s more benign than we would have expected based on historical data.”

P&G’s earnings-per-share of $1.21 missed analyst expectations by two cents, while revenues slightly topped estimates.