New York, January 23, 2024, The Europe Today: Procter & Gamble (P&G) announced a revision to its annual profit forecast on Tuesday, citing the diminishing impact of earlier price hikes in the U.S. and a write-down of the value of its Gillette business in December.
In December, P&G disclosed a $1.3 billion charge related to a reduction in the book value of its Gillette business, attributed to slowed volume growth amid the hybrid post-pandemic work culture and a stronger U.S. dollar. The company anticipates total charges of up to $2.5 billion over two fiscal years, encompassing the Gillette business write-down and restructuring in specific markets.
The waning boost from previous price increases in the consumer goods sector has become evident, prompting companies to reconsider the pace of price hikes. Attention is now focused on P&G’s ability to sustain robust volume growth as production costs ease.
P&G reported flat overall volumes in the second quarter, with an average price increase of 4% across its product categories. The company has experienced declining volumes for five consecutive quarters.
The revised fiscal 2024 earnings forecast now ranges from a 1% decline to being in line with fiscal 2023 earnings per share. This adjustment contrasts with the prior forecast of 6% to 9% growth.
Quarterly net sales for P&G increased by 3.2% to $21.44 billion, slightly below analysts’ estimates of $21.48 billion. On an adjusted basis, the company earned $1.84 per share, surpassing estimates of $1.70, driven by strong demand in the grooming and home care sector. P&G’s shares rose nearly 1% in premarket trading in response to the positive performance in these segments.
