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Procter & Gamble (P&G) pleasantly surprised the market by surpassing quarterly sales and profit estimates on Wednesday. This achievement was attributed to steady consumer demand for P&G’s personal care products and cleaning supplies, as well as strategic price increases.
Over the past few months, P&G has been consistently raising the prices of its product offerings. While this approach has led to a slight decline in sales volumes, as some price-conscious shoppers explore more affordable alternatives, the company has reaped the benefits of higher prices, ultimately strengthening its profitability.
In the first quarter, P&G witnessed an impressive 7% increase in overall product prices, while the total sales volume experienced a marginal 1% drop, aligning with previous quarter figures. Remarkably, despite the volume decrease, P&G’s overall volume performance has been relatively robust in recent weeks, a trend highlighted by UBS analysts who suggest that the company’s volumes are likely to outperform those of many others in the consumer goods industry.
The combination of higher prices and a more favorable cost landscape, including the stabilization of supply chain and input expenses, has facilitated a consistent recovery in P&G’s profit margins.
P&G, recognized for its popular brands such as Gillette razors, Oral-B toothbrushes, and Dawn dish soap, reported a significant improvement in its gross margin, which expanded by 460 basis points to reach 52% for the quarter ending on September 30. This favorable financial performance led to a 1% increase in the company’s premarket trading share value.
P&G has also revised its sales growth expectations for fiscal 2024, now projecting it to be in the range of 2%-4%, compared to its previous estimate of a 3%-4% increase. The consumer goods giant saw its net sales rise to $21.87 billion in the fiscal first quarter, up from $20.61 billion in the previous year, surpassing the average analyst estimate of $21.58 billion according to data from LSEG.
Furthermore, P&G maintains its annual profit forecast, expecting it to grow by 6-9% and reach a range of $6.25 to $6.43 per share. This impressive financial track record demonstrates P&G’s consistent ability to outperform market expectations, which it has done for more than three years now. In the most recent quarter, the company reported a profit of $1.83 per share, surpassing the estimated figure of $1.72 per share.
