Procter & Gamble's price hikes boosted its profit in the latest quarter, the company reported Tuesday, showing that inflation-stricken consumers are not turning away from the company's more expensive household products.
Aside from the price increases that primarily drove sales growth, shoppers also bought more products across P&G's beauty product line and health and family care products.
P&G announced that organic sales for the second quarter of fiscal 2024 increased 4% compared to the same period in 2023. Sales metrics exclude the effects of currency fluctuations, acquisitions, and divestitures.
“We're now moving towards a combination of price-led growth and volume-led growth,” said P&G Chief Financial Officer Andre Schulten. wall street journal. “Over time, that volume component should strengthen.”
Analysts are now watching whether P&G will maintain its price level as inflation slows, the newspaper said.
U.S. inflation rose 3.4% in December, according to the latest Consumer Price Index, which tracks changes in the cost of everyday goods and services.
While this number was higher than expected, it is still significantly cooler than the 6.5% rise in December 2022.
P&G, which makes products such as Tide detergent, Bounty paper towels and Crest toothpaste, said its sales growth in North America is accelerating as U.S. consumers recover from the lingering effects of the pandemic and fears of a recession. Schulten told the outlet.
Schulten said P&G's sales growth could also be driven by people adding new products to their daily lives.
The treasurer cited fiber reinforcement as an example. According to The Journal, only 35% of U.S. households use liquid fabric strengtheners.
Among these households, fiber reinforcing agents, which are touted to make clothes soft and prevent wrinkles, are used in only 65% of laundry, leaving plenty of room for growth.
Meanwhile, organic sales across P&G's fabrics and home care divisions increased 6% year over year in the fiscal second quarter.
Revenue for the three months ended Dec. 31 rose 3% to $21.44 billion. P&G reported.
Analysts polled by FactSet had expected sales of $21.48 billion.
Profits also fell 12% to $3.47 billion, following P&G's announcement in December that it had written down the value of its Gillette razor brand by $1.3 billion.
At the time, P&G announced it would record a $1 billion charge related to a decline in Gillette's book value as the post-pandemic hybrid work environment negatively impacted sales volume growth.
Excluding the impact of the charges, the Cincinnati-based company earned $1.83 per share, beating Wall Street's estimate of $1.71 per share.
Representatives for P&G did not immediately respond to The Post's request for comment.
