Procter & Gamble’s price hikes boosted its earnings in the latest quarter, the company reported Tuesday, indicating that inflation-battered consumers haven’t turned away from the company’s higher-priced household items.
Aside from price increases largely fueling sales growth, shoppers also bought more products across P&G’s beauty lines and health and family care offerings.
P&G said that its organic sales rose 4% in the second quarter of its 2024 fiscal year compared to the same period in 2023. The sales metric excludes the impact of currency fluctuations, acquisitions, and divestitures.
“It’s now shifting to more of a combination of price-driven growth and volume-driven growth,” P&G’s chief financial officer, Andre Schulten, told The Wall Street Journal. “Over time that volume component should strengthen.”
Analysts will now be watching whether P&G will maintain its pricing levels as inflation cools, The Journal reported.
Per the latest Consumer Price Index — which tracks changes in the costs of everyday goods and services — US inflation rose 3.4% in December.
Though the figure came in hotter than expected, it still marks a significant cool-down from the 6.5% advance in December 2022.
P&G, which makes products including Tide detergent, Bounty paper towel, and Crest toothpaste, is seeing accelerating growth in sales volume in North America, Schulten told the outlet, as US consumers recover from lingering effects of the pandemic and fears of a recession.
Growth in P&G’s sales volume could also be driven by people adding new products to their daily routines, Schulten said.
The finance chief pointed to fabric enhancers as an example. Only 35% of US households use liquid fabric enhancers, per The Journal.
Among those households, fabric enhancers — which are advertised as keeping clothes soft and wrinkle-free — are used in just 65% of laundry loads, leaving lots of room for growth.
Meanwhile, organic sales across P&G’s fabric and home care segments increased 6% in its fiscal second quarter versus the year-ago period.
Revenue for the three-month period ended Dec. 31 rose 3%, to $21.44 billion, P&G reported.
Analysts polled by FactSet had expected $21.48 billion.
Earnings also fell 12%, to $3.47 billion, which P&G attributed to writing down the value of its razor brand Gillette by $1.3 billion, following through on an announcement it made in December.
At the time, P&G said it would record the billion-dollar charge related to a drop in the book value of Gillette because of the hybrid post-pandemic workplace, which negatively impacted volume growth.
Excluding the impact of the charge, the Cincinnati-based company’s earnings per share were $1.83, edging out Wall Street’s $1.71-per-share expectations.
Representatives for P&G did not immediately respond to The Post’s request for comment.
