Sales and profits are under pressure at consumer giant Procter & Gamble: hefty price increases cannot fully compensate for falling volumes. Still, the multinational is raising its outlook.
“Consumers continue to do laundry”
In the second quarter of its broken financial year (October to December 2022), Procter & Gamble increased the prices of its branded products such as Ariel, Pampers and Gillette by 10 % on average. However, volumes only fell 6 %: partly the result of falling consumer demand, but also of scaling back operations in Russia and sluggish sales in China, where persistent lockdowns did the business no favours. As a result, overall sales growth was still 5 %.
The brand manufacturer will continue to raise prices throughout this year, as consumers are responding even better than expected to those increases. This is especially the case in categories such as feminine hygiene or cleaning products: “Consumers don’t stop washing their hands or doing their laundry“, CFO Andre Schulten explained in a comment to CNBC. Procter & Gamble is now counting on sales growth of 4 to 5 % for the full financial year, slightly better than the 3 to 5 % previously forecast. The Chinese market will eventually rebound, but pressure on gross margins will continue, the company warns.