P&G posts surprise sales drop as demand slows despite price restraint
Expands on CEO Jon Moeller's comments, adds investor commentary
By Ananya Mariam Rajesh and Jessica DiNapoli
July 30 (Reuters) -Procter & Gamble PG.N posted a surprise drop in fourth-quarter sales, as the company's efforts to reel in years of steep price hikes failed to win over price-conscious consumers who snubbed the company's pricier Charmin toilet paper and Pampers diapers.
P&G shares fell 4.8% on Tuesday.
Rivals including Nestle NESN.S and Unilever ULVR.L also reported first-half sales growth below expectations. PepsiCo PEP.O missed sales expectations earlier in July, with executives saying that consumers of all incomes were feeling squeezed financially.
"(There is) a hole in the consumer sector ... it is getting more difficult to pass on price increases," said Don Nesbitt, senior portfolio manager at F/m Investments, which has a stake in P&G.
"The consumer is becoming more discerning on their purchases, especially the lower-end consumer," he said.
P&G has been spending heavily to launch new products across its laundry business, including its Tide Evo detergent tile, and lower-cost Luvs Platinum Protection diapers, aiming to woo customers looking for cheaper and more environmentally friendly options.
Executives said supply constraints delayed the introduction of the new Luvs. P&G's key diaper business saw sales declines because it lost market share to competitors.
The company has been increasing promotions and offering discounts, resulting in lower prices for some of its products and taking a toll on organic or self-generated sales at its largest division, fabric and home care, which includes Tide detergent.
"P&G's sales (figures) support the theme that you can only push price so far until consumers push back," said Brian Jacobsen, chief economist at Annex Wealth Management.
"If they use promotions and discounts to get the attention of consumers, that could help volumes, but that comes at a price."
MORE EXPENSIVE
Executives, however, said on a call with Wall Street analysts that they were not seeing significant financial pressure among consumers, who they said continued to purchase more expensive P&G products, moving from diapers with taped sides to pull-ups, or single-use detergents to larger sizes, as examples.
CEO Jon Moeller said on the call that P&G has been enhancing products like Dawn dish soap and Charmin toilet paper that are in categories that would see even higher levels of demand if there is a consumer downturn.
"What happens if there's a consumer downturn? People eat at home more often, they're going out less frequently, traveling less frequently, and so categories like hand dish-washing, for example, become important," Moeller said.
P&G reported a 1% rise in overall volumes in its fourth quarter ended June 30, driven by growth in its grooming business, which includes Venus razors, and health care division featuring brands such as fiber supplement Metamucil. The average price also rose 1%, compared with a 7% jump a year ago.
Net sales slipped to $20.53 billion and missed an average expectation of $20.74 billion among analysts polled by LSEG.
P&G has also been hit by weak spending in China, even for daily-use items. Consumer boycotts of its flagship, pricey Japanese beauty brand SK-II continued to hurt results from the country, P&G's second-largest market.
Volumes in P&G's beauty business, which includes SK-II, fell 1%. Executives, however, said the "core" of the business, which includes cheaper shampoos like Head & Shoulders and Pantene, and mainstream skincare brand Olay, is continuing to grow.
Executives on a conference call with investors said sentiment had not improved in China over the last roughly six months.
P&G is also seeing continuing boycotts of Western brands in the Middle East.
The company's adjusted profit of $1.40 per share beat estimates of $1.37, mainly due to lower commodity costs. The company said it expects to repurchase between $6 billion and $7 billion of common shares in fiscal 2025.
It expects fiscal 2025 core profit to rise between $6.91 and $7.05 per share, compared with analysts' expectations of $6.97, and annual sales growth in a range of 2% to 4%, compared with estimates of a 3.04% rise.
Michelle Li, an analyst with P&G investor Parnassus Investments, said in an email that the company's outlook for its 2025 fiscal year "is a good sign."
Reporting by Ananya Mariam Rajesh in Bengaluru and Jessica DiNapoli in New York; Editing by Arun Koyyur, David Holmes, David Evans and Nick Zieminski
Gerelateerde activa
Laatste nieuws
Disclaimer: De entiteiten van de XM Group bieden diensten en toegang tot ons online handelsplatform op basis van uitsluitend-uitvoering, waardoor een persoon de beschikbare content op of via de website kan bekijken en/of gebruiken, zonder dat dit is bedoeld voor wijziging of uitbreiding. Dergelijk(e) toegang en gebruik vallen onder: (i) de algemene voorwaarden; (ii) risicowaarschuwingen; en de (iii) volledige disclaimer. Dergelijke content wordt daarom alleen aangeboden als algemene informatie. Wees u er daarnaast vooral van bewust dat de inhoud op ons online handelsplatform geen verzoek of aanbieding omvat om transacties op de financiële markten uit te voeren. Het beleggen op welke financiële markt dan ook vormt een aanzienlijk risico voor uw vermogen.
Alle materialen die op ons online handelsplatform worden gepubliceerd zijn bedoeld voor educatieve/informatieve doeleinden en omvatten geen – en moeten niet worden beschouwd als het bevatten van – financieel, vermogensbelastings- of handelsadvies en aanbevelingen, of een overzicht van onze handelsprijzen, of een aanbod of aanvraag van een transactie in financiële instrumenten of ongevraagde financiële promoties voor u.
Alle content van derden, alsmede content die is voorbereid door XM, zoals opinies, nieuws, onderzoeken, analyses, prijzen en andere informatie of koppelingen naar externe websites op deze website worden aangeboden op een 'zoals-ze-zijn'-basis, als algemene marktcommentaren, en vormen geen beleggingsadvies. Voor zover dat content wordt beschouwd als beleggingsonderzoek, moet u zich ervan bewust zijn en accepteren dat de content niet bedoeld was en niet is voorbereid in overeenstemming met de wettelijke vereisten die zijn opgesteld om de onafhankelijkheid van beleggingsonderzoek te bevorderen en als zodanig onder de geldende wetgeving en richtlijnen moet worden beschouwd als marketingcommunicatie. Zorg ervoor dat u onze Mededeling over niet-onafhankelijk beleggingsonderzoek en risicowaarschuwing in verband met de voorgaande informatie doorneemt en begrijpt; die kunt u hier lezen.
