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% 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% and 5%. 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%, driven by beauty and grooming. Also read: Behind the rise of agency chief AI officers “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. The shares fell as much as 4.5% in New York trading Thursday. Including Thursday’s move, P&G’s stock has declined nearly 5% so far this year, less than the drop of the S&P 500 Index. Tariffs, inflation Moeller told CNBC in an interview Thursday morning that the company will likely roll out price increases during its next fiscal year, which starts in July. “Tariffs are inherently inflationary,” Moeller said. He said the Trump administration has been “very open to dialogue” but that the company is spending a “fair amount of time” trying to figure out where the economy is headed. “Our job isn’t to design policy. Our job is to optimize the business outcome against the backdrop of that policy.” He also noted that the weaker dollar has been “a help recently.” More from Ad Age Moeller said revenue in China, P&G’s second-largest market in terms of sales and profit, was down 2% in the most recent quarter. While that’s an improvement from the 3% drop in the prior quarter, the recovery in the country is “going to take a while and the path forward will be bumpy,” Moeller said. P&G’s baby diaper business is growing at a double-digit rate in China, he added, despite declining birth rates. Price increases Before increasing prices, P&G will seek to shift sourcing or change formulations to reduce exposure to tariffs. And the company will aim to improve a product when it increases the price, Chief Financial Officer Andre Schulten said during a media call on Thursday. “It’s premature to speculate what level of price increase we will see,” Schulten said. It depends on the product, the market where it’s sold and the “still very volatile” level of tariffs, he said. “The team is working through this landscape that’s changing on a daily basis.” 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. Don’t miss: Influential ad archive AdLand gets new lease on life through acquisition by Marketecture 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 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% of what it sells in the US and imports the remaining 10%. 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% of them are sourced from China, which includes mainly raw materials, packaging and some finished products. —Bloomberg News

P&G lowers sales guidance on ‘volatile’ market conditions

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