Quarterly profits edged higher at Procter & Gamble as the consumer goods giant implemented price increases with only a limited hit to demand, the company said Wednesday.
Maker of the Tide, Old Spice and Crest brands, P&G has been buffeted by the economy-wide surge in commodity prices and freight service costs, most recently exacerbated by the Russian invasion of Ukraine.
As the company has lifted prices in recent months to offset these expenses, the consumer reaction so far has been “about 20 to 30 percent more favorable than we would have assumed based on historical data,” Chief Financial Officer Andre Schulten said on a conference call with reporters.
But Schulten noted there is no guarantee this trend will continue, saying “as more pricing flows through to the consumer, we expect that volume will have somewhat of a negative impact.”
P&G reported a seven percent jump in revenues to $19.4 billion (£14.88bn), due in part to five percent higher pricing. Profits rose three percent to $3.4 billion.
All five of P&G’s product divisions scored higher net sales, with health leading, in part due to much greater sales of items to treat coughs, colds and the flu.
The company now sees $3.2 billion in additional costs in 2022 due to higher expenses for commodities and freight and unfavorable movements in the foreign exchange markets. That’s $400 million higher than the prior estimate.
P&G lifted its full-year sales outlook, but maintained its profit forecast.
In the most recent quarter, P&G saw some deceleration in price increases in transportation and warehousing costs compared with the prior six months “but still significantly up,” Schulten said.
The company is planning for continued inflation pressures due to supply chain woes and the impact of the Ukraine war on energy costs, Schulten said.
“It’s not irrational to assume that we will see continued increases, but at a slightly slower pace,” he said.
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