Procter & Gamble (PG) Q2 2022 earnings beat estimates

Procter & Gamble on Wednesday reported quarterly earnings and income that topped Wall Avenue’s expectations as value hikes helped offset larger commodity and freight prices.

On the heels of its robust efficiency, the corporate raised its outlook for gross sales development however mentioned it expects inflation to weigh much more closely on its fiscal 2022 outcomes.

Shares of P&G rose 3.9% in morning buying and selling.

Right here’s what the corporate reported in contrast with what Wall Avenue was anticipating, based mostly on a survey of analysts by Refinitiv:

• Earnings per share: $1.66 vs. $1.65 anticipated
• Income: $20.95 billion vs. $20.34 billion anticipated

The patron large reported fiscal second-quarter web earnings of $4.22 billion, or $1.66 per share, up from $3.85 billion, or $1.47 per share, a 12 months earlier. Analysts surveyed by Refinitiv had been anticipating $1.65 per share.

Web gross sales rose 6% to $20.95 billion, topping expectations of $20.34 billion. Natural income, which strips out the impression of overseas forex, acquisitions and divestitures, additionally rose 6% within the quarter. About half of that development got here from the good thing about elevating costs on choose merchandise.

“Whereas it’s very early for these commodity-based value will increase, to this point, we see optimistic indicators,” CEO Jon Moeller mentioned Wednesday on CNBC’s “Squawk Field.” “Most likely 20% to 30% much less value elasticity than we had been anticipating, and should you have a look at, for instance, private-label market shares — personal label being the bottom value supplied available on the market — they’re down.”

Extra value will increase are on the way in which. Executives advised analysts on the convention name that they already advised retailers about will increase planed for material care merchandise, like Tide detergent and Downy dryer sheets, slated to take impact Feb. 28. In mid-April, P&G will elevate costs on a few of its private well being care merchandise.

P&G’s health-care and cloth and home-care segments each noticed natural gross sales leap 8%, tying for the very best of its divisions. The corporate mentioned a extra intense flu and chilly season propelled natural gross sales for its private health-care enterprise by 20% for the quarter, lifting demand for Vicks and ZzzQuil merchandise. Its oral-care merchandise, which embody Oral-B toothbrushes and Crest toothpaste, obtained a lift from value will increase.

Value hikes additionally helped P&G’s home-care phase, which incorporates Febreze and Mr. Clear. The pandemic has created extra demand for cleansing merchandise. P&G’s fabric-care enterprise noticed double-digit development, due to robust gross sales of material enhancers and laundry detergent pods.

The corporate’s grooming division, which incorporates Venus and Gillette, noticed natural gross sales leap 5%. The phase has struggled lately attributable to elevated competitors and shaving traits, however value hikes helped gross sales this quarter.

Natural gross sales of the corporate’s child, female and household care phase rose 5% within the quarter, largely attributable to larger costs. The division contains Pampers diapers, Charmin bathroom paper and Bounty paper towels.

P&G’s magnificence phase reported the smallest natural gross sales change for the quarter, rising simply 2%. However the firm is seeking to enhance these outcomes with three acquisitions within the class over the past three months, snapping up Farmacy Magnificence, hair-care model Ouai and Tula Skincare.

“All of these deal with the premium channel within the U.S., in order that’s a chance for us,” CFO Andre Schulten mentioned on a name with journalists. “We’ve efficiently performed these integrations, when you consider First Help Magnificence or Native [deodorant].”

For fiscal 2022, P&G is now calling for 3% to 4% gross sales development, up from its prior forecast of two% to 4%. It additionally plans to spice up its inventory buybacks for the fiscal 12 months from a variety of $7 billion to $9 billion to a variety of $9 billion to $10 billion. However the firm didn’t change its outlook for earnings because it additionally predicted larger prices.

For the second consecutive quarter, P&G elevated its inflation forecast. The corporate expects to pay $2.3 billion after tax in commodity prices and $300 million after tax for larger freight prices, up from final quarter’s outlook of $2.1 billion on commodities and $200 million on freight. Mixed with a $200 million hit from overseas forex, P&G is forecasting a $2.8 million headwind, or $1.10 per share, to its fiscal 2022 earnings in contrast with the 12 months prior.

Learn the complete press launch right here.