Procter & Gamble beat Wall Street forecasts on the top and bottom lines in its fiscal first quarter on the back of price hikes, but it lowered its full-year sales forecast due to the stronger dollar.
The consumer goods giant reported first-quarter net sales of $20.6 billion, up 1 percent compared to the previous year and topping analysts’ expectations of $20.28 billion. It was driven by a 9 percent increase from higher pricing and a 1 percent increase from positive product mix, partially offset by a 3 percent decrease in shipment volumes.
While diluted net earnings per share were $1.57, a decrease of 2 percent compared with the prior year, it was above Wall Street forecasts of $1.54.
P&G reduced its guidance range for fiscal 2023 sales to be down 3 percent to down 1 percent versus previous forecast of flat to 2 percent. Foreign exchange is now expected to be a six-percentage point headwind to sales growth for the fiscal year.
The company maintained its outlook for fiscal 2023 diluted net earnings per share growth in the range of in-line to up 4 percent versus fiscal 2022 EPS of $5.81. Given increased foreign exchange impacts, it now expects EPS results to be toward the low end of the fiscal year guidance range.
“We delivered solid results in our first quarter of fiscal 2023 in a very difficult cost and operating environment,” said Jon Moeller, chairman of the board, president and chief executive officer. “These results enable us to maintain our guidance ranges for organic sales and EPS growth for the fiscal year despite continued significant headwinds. We remain committed to our integrated strategies of a focused product portfolio, superiority, productivity, constructive disruption and an agile and accountable organization structure. These strategies have enabled us to build and sustain strong momentum. They remain the right strategies to navigate through the near-term challenges we’re facing and continue to deliver balanced growth and value creation.”
In beauty, organic sales increased 4 percent compared with a year earlier. Skin and personal care organic sales rose mid-single digits due to innovation-driven volume growth and increased pricing, partially offset by negative mix from the decline of SK-II.
Grooming segment organic sales increased 5 percent over the same time period due to higher pricing, partially offset by negative mix due to a market slowdown in appliances.
On if there is evidence of trade down across all its product offerings, Moeller told analysts during an earnings call that trade down within its portfolio is per design. “That’s why we have created different value tiers. That’s why we have created different pack sizes, so some level of consumer shifting is expected. We are very encouraged by many of our consumers actually continuing to look for the upper end of our portfolio.”