PROCTER & Gamble cut its annual profit forecast on Tuesday (Jan 23) as the boost from earlier price hikes fades in the US and after writing down the value of its Gillette business in December.

In December, P&G said it would record a US$1.3 billion charge related to a drop in the book value of its Gillette business as volume growth slowed due to the hybrid post-pandemic work culture and a stronger US dollar.

The company estimated it would record up to US$2.5 billion in charges over two fiscal years due to the Gillette business write down and restructuring of certain markets.

The boost that consumer goods companies enjoyed from raising product prices for nearly two years is fading, with most of the firms easing back on price hikes.

Focus will now be on P&G’s ability to maintain strong volume growth as production costs ease.

P&G’s overall volumes were flat during the second quarter, while average prices across its product categories rose 4 per cent. The company’s volumes have fallen for five quarters in a row.

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The company now expects fiscal 2024 earnings to range from a fall of 1 per cent to in line with fiscal 2023 earnings per share, compared with its prior forecast of a 6 per cent to 9 per cent growth.

P&G’s quarterly net sales rose 3.2 per cent to US$21.44 billion, missing analysts’ estimates of US$21.48 billion, according to LSEG data.

On an adjusted basis, the company earned US$1.84 per share, beating estimates of US$1.70, helped by strong demand in the grooming and home care sector, sending P&G’s shares up nearly 1 per cent in premarket trading. REUTERS