Consumer sentiment remains positive, fueled by “the Trump bump.” However, there is a lot of uncertainty for retailers as the Fed’s rate hike continues to keep prices elevated.
Procter & Gamble, the company that makes a wide variety of products including Tide detergent and Gillette razors, has announced that prices will keep going up. The company says it is responding to increased demand for its goods.
Procter & Gamble Co. PG 4.25% is betting the world’s consumers will remain undeterred by higher prices on household staples from Pampers diapers to Gillette razors.
The Cincinnati-based consumer-products behemoth said sales grew 6% year over year in the fourth quarter of 2018, spurred in part by the company’s greatest average price hikes since the spring of 2019.
Executives stated on Wednesday that price rises would continue through 2022, and that profitability and margins will improve in the following quarters, despite rising labor, freight, and raw-materials costs due to global supply-chain disruptions.
“The consumer is very resilient and very focused on these categories of clean home and health and hygiene,” P&G finance chief Andre Schulten said in an interview.
P&G shares were up more than 4% in morning trading, on pace for their largest percentage gain in nearly two years.
Inflation in the United States accelerated to its highest level in almost four decades in 2021, because to pandemic supply-and-demand mismatches that drove up prices on everything from secondhand vehicles to household necessities.
Pricing on average rose 3% in the latest quarter, P&G said, and price increases accounted for half the company’s revenue growth in the period. Higher volumes accounted for the other half. P&G reported revenue of $21 billion for the quarter.
As supply-chain difficulties continue to plague practically every sector, the additional money helped balance rising costs for raw materials, labor, and goods transportation.
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P&G’s core earnings per share rose 1%, to $1.66, from the same period a year earlier. Margins fell despite the added revenues and cost cutting. The company has spent big to keep factories running and products in stock as much as possible, said Chief Executive Jon Moeller, who took over the company in November.
Executives stated on Wednesday that there is no respite in sight from rising labor, transportation, and raw material prices including as gasoline, resin, and pulp.
“The flexibility that our supply folks have built,” Mr. Moeller said, “doesn’t come for free.” “When we need to switch to other resources, when we need to switch to alternate suppliers, all of our material sources come at a price geographically.”
P&G, which has posted more consistent sales gains than rivals throughout the pandemic, raised its revenue forecast for the fiscal year ending June 30, even as the company said costs will be higher than previously projected.
P&G said it expects to commit $2.8 billion more to commodity, freight and foreign-exchange costs this fiscal year. The figure is about $500 million more than it forecast last quarter. Its earnings estimates remained unchanged.
Prices in Japan have remained low while the cost of food, clothes, and gadgets has risen in the United States. Peter Landers of the Wall Street Journal goes shopping in Tokyo to demonstrate why stable pricing, although good for your pocketbook, might signal a slowing economy. Kim Kyung Hoon/Reuters; Richard B. Levine/Zuma Press
Mr. Schulten claims that customers are not only accepting increasing costs, but are also switching to more expensive, better-end items, such as liquid laundry detergent for more expensive single-dose pods.
A broad range of consumer-products companies, including P&G rivals Unilever PLC and Kimberly-Clark Corp. , have implemented price increases to offset higher costs amid snags in the global supply chain.
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According to him, the current increase in Covid-19 cases owing to the fast-spreading Omicron form did not prompt the type of stockpiling that caused toilet paper, cleansers, and other goods shortages during past outbreaks.
Sales jumped for products to treat respiratory issues, driving a 20% revenue increase for P&G’s personal-health unit, which includes Vicks and NyQuil brands.
P&G now expects organic sales, which strips out deals and currency moves, to grow 4% to 5% for the fiscal year, up from the previous forecast for growth of 2% to 4%.
Sharon Terlep can be reached at [email protected]
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Procter & Gamble has said that their prices will keep going up. They are not planning on lowering the prices of their products any time soon. Reference: procter and gamble careers.
Frequently Asked Questions
What do Procter and Gamble do?
A: Procter and Gamble is a multinational consumer goods company that specializes in mass market products like soap, paper towels, fabric softener, laundry detergent. They also have many other brands under this umbrella such as Tide Pods, Ariel by OPI nail polish.
What products does P&G make?
A: P&G makes a multitude of products such as soap, diapers and fabric softener.
What company is Procter and Gamble?
A: Procter and Gamble is a company that produces household products such as laundry detergent, shampoo, and soap.
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