Procter & Gamble, a consumer giant company, reported quarterly earnings and revenue that topped analysts’ expectations, but higher costs weighed on the company’s profits.
The company also raised its forecast for commodity and freight costs for the remainder of the fiscal year, warning that it believes inflation is still increasing.
Shares of the company fell 1.7% in premarket trading, and here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $ 1.61 vs. $ 1.59 expected
- Revenue: $ 20.34 billion vs. $ 19.91 billion expected
P&G reported fiscal first-quarter net income of $ 4.11 billion, or $ 1.61 per share, down from $ 4.28 billion, or $ 1.63 per share, a year earlier. Analysts surveyed by Refinitiv were expecting earnings per share of $ 1.59.
Net sales rose 5% to $ 20.34 billion, topping expectations of $ 19.91 billion. Organic revenue, which strips out the impact of acquisitions, divestitures and foreign currency, increased by 4% in the quarter.
Price hikes on some of P&G’s products, like Pampers diapers, contributed to organic sales growth by 1%. Higher prices offset increased freight costs during the quarter but couldn’t keep up with climbing commodity costs.
P&G CFO, Andre Schulten, said on a call with press that the company would raise prices on certain products within the beauty, oral care and grooming categories to deal with inflation. However, he said that the company isn’t intentionally prioritizing premium products because of supply chain constraints.
The company said that it now expects after-tax commodity costs of $ 2.1 billion and freight costs of $ 200 million to weigh on its fiscal 2022 results. Last quarter, the company forecast that commodity and freight costs would hit its earnings by $ 1.9 billion.
“We base our forecast on spot rates, so we don’t expect any easing on commodity cost forecasts,” Schulten said.
Despite higher costs, P&G reiterated its prior forecast for full-year earnings and revenue. P&G is calling for fiscal year sales to grow 2% to 4% from the prior year and core earnings per share to increase by 3% to 6%.