While easing slightly, currency fluctuations continue to weigh on Procter & Gamble as both its top and bottom lines fell in the second quarter.
The Cincinnati, Ohio-based company whose brands include Pampers, Tide, Gillette and Pantene among many others, reported net sales of $20.77 billion, 1 percent lower than the prior year, but slightly above analysts’ predictions for $20.73 billion. Unfavorable foreign exchange had a 6 percent impact on net sales.
Within that, beauty net sales fell 3 percent, grooming was down 9 percent and baby, feminine and family care was 1 percent lower. In the opposite direction, health care rose 2 percent, while fabric and home care edged up 1 percent.
Further breaking down beauty, skin and personal care organic sales, excluding the impact of foreign currency, acquisitions and divestitures, increased by the low-single digits due to innovation-driven volume growth and higher pricing, partially offset by negative mix from COVID-19-related declines in SK-II, according to the company. Hair care organic sales increased in the mid-single digits driven by increased pricing, partially offset by volume declines due to market contraction.
Last week, P&G Beauty acquired Mielle Organics, a Black-founded textured hair care brand, for an undisclosed sum. The brand makes hair care and skin care products that are sold at major mass retailers, including Walmart, Target and CVS.
P&G’s net income came in at $3.9 billion, down 7 percent from a year ago. Diluted net earnings per share decreased by 4 percent to $1.59, as expected by Wall Street.
Despite year-over-year declines for the top and bottom lines, P&G maintained its outlook for fiscal 2023 diluted net EPS growth in the range of in-line to up 4 percent versus fiscal 2022 EPS of $5.81. The company added that given continued significant cost headwinds from commodity and materials costs and foreign exchange impacts, it continues to expect EPS results to be toward the lower end of the fiscal-year guidance range.
It raised its guidance for fiscal 2023 sales to a range between flat and a 1 percent drop versus the prior fiscal year, from a prior range of down 3 percent to down 1 percent. It also raised its outlook for organic sales growth to a range of 4 to 5 percent versus the prior fiscal year from a prior growth range of 3 to 5 percent.
During a call with analysts Jon Moeller, president and chief executive officer of P&G, said: “The world seems to want everything to be better, as do I. That’s really not reality though. There’s an incredible amount of uncertainty that remains. None of us, I think, globally really understand what the recovery rate in China is going to be as an example.”
He continued: “You have the war in Eastern Europe, the highest inflation rates in 40 years, you have continued volatility in both the currency markets and the commodity markets.…So all that put together, while I’m extremely happy with the progress the organization is making. I’m extremely confident that the strategy that we have is the right one and it’s going to continue to serve us well. It’s just not an easy time to be taking up guidance to the top range of possibility.”