P&G Lowers Sales Guidance on ‘Volatile' Market Conditions
Procter & Gamble Co. cut its annual sales and profit outlook, citing tariffs and volatility in consumer demand.
The maker of Tide detergent expects organic sales growth this year of approximately 2 percent versus the prior year, the company said Thursday in a statement. That's lower than what the company forecast in January when it said it was expecting that figure to increase between 3 percent and 5 percent.
Sales in the most recent quarter were $19.8 billion. The overall volume of organic sales was flat during the three months that ended on March 31. Beauty and grooming products increased slightly, while the volume of baby and feminine care products fell. Prices rose by 1 percent, driven by beauty and grooming.
'We delivered modest organic sales and EPS growth this quarter in a challenging and volatile consumer and geopolitical environment,' chief executive officer Jon Moeller said in the statement. 'We're making appropriate adjustments to our near-term outlook to reflect underlying market conditions.'
P&G said it expects earnings per share in the current fiscal year, which ends in June, to be in the range of $6.72 to $6.82 per share versus $6.59 in the prior year. That's below the company's January outlook.
Shares in the company dropped 2 percent in premarket trading in New York. P&G's stock is down 1 percent so far this year, compared to a 9 percent drop in the S&P 500.
P&G started the year strong, reporting in January its first quarterly sales beat in more than a year. That revenue increase came mostly from higher volume rather than price hikes, which had fueled much of the previous year's growth.
But in February, chief financial officer Andre Schulten said its shipments to retailers had slowed and warned there was a risk the company could miss its profit guidance. He also called out slower consumption in Asia and Africa as well as in the Middle East, which he attributed to 'anti-Western sentiment' in that region.
Major US companies have taken different tacks to navigate the difficulty of offering investors guidance on their sales and profit while the outlook on trade and the economy keeps shifting. United Airlines Holdings Inc. took the unusual step of issuing two profit forecasts — one if the current environment remains stable and another one if the US economy enters a recession. Delta Air Lines Inc. withdrew its annual financial guidance.
Even before the tariffs implemented during the first Trump administration, P&G reworked its supply chains to manufacture more of its products in the countries where those items are sold. The company domestically manufactures 90 percent of what it sells in the US and imports the remaining 10 percent. That's reduced the company's exposure to the latest rounds of tariffs. But it still has some exposure to the high tariffs on imports from China. Of the goods that P&G imports into the US, less than 15 percent of them are sourced from China, which includes mainly raw materials, packaging and some finished products.
By Jeannette Neumann
Learn more:
P&G Posts Surprise Sales Drop as Demand Slows Despite Price Controls
Attempts to raise prices more slowly have not been enough to win back price-conscious customers for not just P&G, but also for its CPG giant rivals Nestle and Unilever.
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