Procter & Gamble (PG) Outcomes Q3 2023

Procter & Gamble on Friday reported quarterly earnings and sales that beat analysts’ expectations as higher prices helped offset lower demand for its products, particularly in Europe.

The company, which owns household brands like Febreze, Charmin, and Tide, also raised its guidance for fiscal 2023 organic sales growth to 6%, from its previous range of 4% to 5%.

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P&G shares up more than 4% in morning trade.

Here’s what the company reported for the quarter ended March 31, compared to Wall Street expectations based on a survey of analysts by Refinitiv:

  • Earnings per share: $1.37 versus $1.32 expected
  • Revenue: $20.07 billion versus $19.32 billion expected

P&G reported net income of $3.4 billion, or $1.37 per share, for the third quarter, up from $3.36 billion, or $1.33 per share, a year ago.

net sales rose 4% to $20.07 billion. Organic revenue, which excludes the impact of foreign currencies, acquisitions and divestitures, rose 7% in the quarter.

But the company’s volume, which excludes price and currency changes, fell 3% as consumers turned to cheaper alternatives. Across the portfolio, P&G prices rose 10% year over year. The company raised prices again in the U.S. and Europe in the fiscal third quarter, CFO Andre Schulten said during a press briefing.

This is the fourth consecutive quarter of contracting volume for the consumer giant. In a separate conference call with analysts, Schulten said he expects it will be a few more quarters before the company can return to volume growth. He downplayed volume declines during both calls on Friday, striking an upbeat tone and saying consumption trends around the world had stabilized.

Volume improved sequentially since the company’s second quarter, Schulten said. He added that quarterly volume was down just 2% year over year excluding P&G’s business in Russia, where the company has scaled back operations and advertising since the Kremlin launched the war in Ukraine last year has begun.

Schulten said Europe is a pain point as consumers there turn to private label products. He anticipates that the market will continue to weigh on volume.

However, Schulten said volume was increasing in the US, the company’s largest market. He pointed to another bright spot in China, P&G’s second-largest market, which is finally recovering from Covid lockdowns and seeing an improvement in consumer confidence. P&G is also still waiting for travel shopping in China to pick up again. Travel retail is a key revenue stream for SK-II, an upscale skin care brand owned by P&G.

All of P&G’s businesses reported declining volumes for the quarter, with the exception of its health and beauty units, both of which posted volume growth of just 1%.

P&G’s Textile and Home Care segment, which includes brands like Tide, Swiffer and Mr. Clean, saw the sharpest decline among the company’s businesses, down 5% in volume. According to P&G, the main volume declines were in Europe.

The baby, feminine and family care segment saw a 4% decline in volume. The division, which includes Pampers, Bounty and Charmin, also saw volumes decline in Europe. The company said demand for its diapers is lower there.

P&G’s grooming business, which owns Gillette and Venus razors, was down 1% in volume. The unit generally underperformed the rest of the P&G portfolio, but performed relatively better this quarter. However, reduced demand for his devices caused the unit to decline in volume.

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