P&G raises sales outlook, but higher costs weigh on Q2 earnings

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NEW YORK (TBEN) — Procter & Gamble Co., the maker of Crest toothpaste and Charmin toilet paper, raised its full-year sales outlook, though the consumer products giant warned that higher commodity prices continue to weigh on earnings.

The improved outlook, published on Thursday, came as the Cincinnati-based company reported lower fiscal revenue and sales for the second quarter from a year ago, though the results beat Wall Street’s expectations.

Like many consumer products manufacturers, P&G has been forced to raise the prices of its wide range of products to offset higher costs in transportation, labor and other areas. In the last quarter, P&G said it had to raise prices by 10%. Still, shoppers have remained fairly resilient when it comes to purchasing essentials, and the company has offered several lower-cost options across its portfolio to help retain price-sensitive shoppers.

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“Consumers are holding up remarkably well in the US,” P&G chief financial officer Andre Schulten told reporters on a phone call Thursday. “We don’t see any significant shifts that are noteworthy.”

P&G reported earnings of $3.93 billion, or $1.59 per share, for the quarter ended December 31. That compares to $4.22 billion, or $1.66 per share, in the same period a year ago.

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The results were slightly above Wall Street’s expectations. The median estimate from nine analysts surveyed by Zacks Investment Research was for earnings of $1.58 per share.

The company said beauty products rose 9% on average, while fabrics and home care rose 13%.

The world’s largest consumer products manufacturer posted sales of $20.77 billion in the period, down 1% from $20.95 billion in the same period a year ago. Eight analysts surveyed by Zacks expected $20.61 billion.

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The company said it expects total revenue for the current fiscal year to be between unchanged and a 1% decline, up from its previous forecast of a 1% to 3% decline. The company maintained its full-year earnings outlook, but said it could be at the lower end of expectations due to higher commodity and material costs.

In premarket trading, shares fell nearly 2% to $142.80.

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Elements of this story were generated by Automated Insights (http://automatedinsights.com/TBEN) using data from Zacks Investment Research. Access a Zacks stock report on PG at https://www.zacks.com/TBEN/PG