Procter & Gamble beat Wall Street expectations on the top and bottom lines, but profits were bolstered in part by price hikes and it still isn’t seeing the recovery in travel retail that it had hoped for.
The consumer goods giant reported third-quarter fiscal-year 2023 net sales of $20.1 billion, an increase of 4 percent versus the prior year. Analysts polled by Factset forecast $19.3 billion.
Organic sales, which exclude the impacts of foreign exchange and acquisitions and divestitures, rose 7 percent.
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Diluted net earnings per share were $1.37, an increase of 3 percent versus the prior year, beating Wall Street expectations for $1.32. Net earnings were $3.4 billion for the quarter.
P&G raised its guidance for fiscal 2023 all-in sales to grow approximately 1 percent versus the prior fiscal year, from a prior guidance range of down 1 percent to in-line. It maintained its outlook for 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 it expects EPS results toward the lower end of the fiscal year guidance range.
Nevertheless, of the economic backdrop, chief financial officer Andre Schulten said: “We continue to face highly volatile consumer and macro dynamics. We also continue to see high year-over-year input costs, inflation in the upstream supply chain and in our own operations, headwinds from foreign exchange, geopolitical issues and historically high inflation impacting consumer budgets.”
Beauty net sales rose 3 percent compared with a year ago, to almost $3.5 billion. Beauty segment organic sales increased 7 percent versus a year ago. Hair care organic sales increased by double digits driven by increased pricing. Skin and personal care organic sales grew in the low single digits as higher pricing and innovation-based volume growth were partially offset by lower sales of SK-II in the travel retail channel.
“We’re not yet seeing any return of Chinese consumers to travel retail. That is a significant negative for us in the SK-II business specifically,” Schulten told analysts on a call to discuss earnings.
Grooming segment organic sales increased 7 percent versus a year ago as higher pricing was partially offset by negative volume and mix impacts from market contraction of appliances. In particular, it highlighted the new Gillette Labs exfoliating razor, male and female intimate grooming innovations and cardboard packaging upgrades as driving strong growth.
“We delivered strong results in the third quarter of fiscal-year 2023 in what continues to be a very difficult cost and operating environment,” concluded Jon Moeller, chairman of the board, president and chief executive officer.