Procter & Gamble Boosts Profit Forecast on Strong Demand for Tide and Dawn
In a recent announcement, Procter & Gamble (P&G) has raised its annual profit forecast thanks to lower commodity costs and a surge in consumer demand for popular products like Tide detergent and Dawn dish soap. Despite falling short of analysts’ expectations in net sales, P&G has managed to improve its bottom line.
Chief Financial Officer Andre Schulten revealed that the company has seen a 3% increase in volume growth in the U.S., with consumers sticking to trusted brands like Tide and Dawn instead of switching to non-branded products. This trend has been attributed to cost-conscious consumers turning to value-based products, according to P&G investor ZCM.
However, P&G has experienced lower sales of its high-end SK-II skin care line in China, which has been attributed to weaker consumer spending and environmental concerns. Nevertheless, the company expects to benefit from favorable commodity costs in the coming fiscal year, with an after-tax benefit of $900 million expected, up from the previous forecast of $800 million.
With core earnings per share anticipated to rise between 10% and 11% in the current fiscal year, P&G remains optimistic about its financial outlook. Despite this positive forecast, shares of P&G were down about 2% in early trading following the earnings report. Analysts have expressed skepticism about P&G’s ability to increase volumes in a challenging pricing environment, despite the improved forecast.
Soft volume trends have been noted in countries like Egypt, Saudi Arabia, Turkey, Indonesia, and Malaysia, which has been attributed to heightened tensions in the Middle East. Overall, P&G reported flat volumes in the third quarter, with average prices rising by 3%. The company has stated that it does not plan to further increase prices, opting to focus on increasing volumes instead.
“Infuriatingly humble tv expert. Friendly student. Travel fanatic. Bacon fan. Unable to type with boxing gloves on.”