Procter & Gamble, the producer of Always, Dash and Dreft, is feeling the effects of higher prices and a stronger dollar. Profits are down and demand is falling, although the consumer products giant continues to perform above expectations.
4 billion in additional costs
Procter & Gamble is holding up better than expected in the current challenging environment. The manufacturer of Ariel, Gillette and Pampers, among others, saw its sales rise slightly by 1% to 20.6 billion dollars (about 21 billion euros) in the quarter just ended, which is more than analysts had dared to hope for. Although price and operations management is currently very difficult, organic growth would remain “solid”, according to CEO Jon Moeller.
Rising raw material costs have still led P&G to increase prices by 9%, which has reduced sales volume by 3%. Consumers are becoming somewhat put off by the ever-increasing prices. Supermarket chains have already revealed that people are opting more for cheaper private labels. In addition, the strength of the dollar against the euro and the pound has cost P&G 6% of its turnover. As a result, net profit fell by 4% to 3.9 billion dollars (4 billion dollars).
For the full year 2023, which ends at the end of June, P&G is now lowering its forecast. While revenue growth was initially expected to be around 2%, the group now expects sales to fall by between 1% and 3%. Currency effects alone would cost the group around 1.3 billion dollars, while transport costs would increase by 200 million dollars and raw material costs by as much as 2.4 billion dollars.