P&G flags bigger hit to annual profit from higher commodity costs, beats revenue estimates
Its first-quarter net sales rose 4% to US$23.28 billion, beating analysts’ estimates of US$22.80 billion
PROCTER & Gamble on Thursday (Oct 22) warned of a profit hit from higher commodity-related costs this year, even as first-quarter sales beat Wall Street estimates, helped by demand for its beauty and home-care products.
The Pantene shampoo maker now expects higher raw material, energy and transportation costs to reduce fiscal 2027 profit by about US$1.4 billion, up from its previous estimate of US$1 billion.
Core operating margin fell 80 basis points in the quarter ended Sep 30, despite 250 basis points of productivity savings, including efforts to make its supply chain more efficient.
Higher fuel prices have pushed up transportation and freight costs for packaged-goods companies, while a shortage of truck drivers on some routes has added to the pressure, a P&G spokesperson told Reuters.
US retail diesel prices, which have risen following the US war in Iran, hit a record US$6 a gallon in September and have remained elevated.
P&G is investing in product innovation while negotiating with suppliers and optimising transportation routes to contain costs, the spokesperson said.
The Tide maker’s first-quarter net sales, however, rose 4 per cent to US$23.28 billion, beating analysts’ estimates of US$22.80 billion, according to data compiled by LSEG.
It shares were up about 2 per cent in premarket trading.
Volumes rose in its beauty business, helped by demand for higher-priced hair-care products as consumers continued to spend on self-care despite pressure on household budgets from higher fuel and food costs.
In August, P&G said it would buy supplements maker Thorne as it sought to tap growing demand for health and wellness products.
Overall volumes rose 2.4 per cent, while prices increased about 0.4 per cent in the three months through September.
Swiss packaged-goods maker Nestle also topped estimates for organic sales growth on Thursday, helped by stronger volumes.
P&G maintained its fiscal 2027 forecasts for organic sales growth of 1 per cent to 3 per cent and core earnings of roughly US$7 per share.
P&G reported first-quarter core earnings of US$2 per share, above analysts’ estimate of US$1.88. REUTERS
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