Procter & Gamble Boosts Profits with Latest Price Increases, Surpasses Earnings Estimates

Consumer goods giant Procter & Gamble has once again implemented price increases, resulting in a significant boost to its profit margins. The company’s stock surged by 1.6% during premarket trade on Friday, following a stellar fiscal fourth-quarter performance that surpassed earnings estimates.

For the quarter ending June 30, Procter & Gamble reported a net income of $3.384 billion, or $1.37 per share, a notable increase from the $3.052 billion, or $1.21 per share, recorded in the same period the previous year. Adjusted per-share earnings were also higher than the FactSet consensus, reaching $1.37 compared to the expected $1.32. The company’s sales witnessed a robust rise from $19.5 billion to $20.6 billion, exceeding the FactSet consensus of $20.0 billion.

The driving forces behind the sales growth were a 7% increase from higher pricing and a 2% increase from a favorable product mix. However, these gains were somewhat offset by a 1% decline in shipment volumes. Procter & Gamble’s Chief Executive, Jon Moeller, expressed satisfaction with the company’s performance, highlighting that they met or exceeded their initial plans for sales, earnings, and cash despite facing challenging operating conditions and significant cost headwinds.

The price increases were seen across various categories, with beauty sales rising 8% and grooming sales increasing by 3% after the company raised prices in those segments. Healthcare sales grew by 3% following a 6% price hike, while fabric & home care sales rose 5% after a 6% increase in prices. Additionally, baby, feminine, and family care sales experienced a 7% boost as the company raised prices by 8%.

Despite the success, Procter & Gamble has faced criticism for participating in what has been termed “greedflation,” where companies raise prices to protect profits during periods of inflation, leading to improved profit margins. Nevertheless, the company remains committed to its strategic focus on daily use categories, emphasizing brand superiority, productivity, constructive disruption, and organizational agility in pursuit of sustainable, balanced growth and value creation.

Looking ahead, Procter & Gamble anticipates fiscal 2024 EPS to grow between 5% to 9%, with a projected range of $6.25 to $6.43, and sales to rise by 3% to 4%. These figures are in line with the FactSet consensus, which expects fiscal 2024 EPS to reach $6.37 and a sales increase of 3.6%.