P&G earnings top estimates as price hikes offset rising costs, company raises 2022 sales forecast

Tide, a laundry detergent owned by the Procter & Gamble company, is seen on a store shelf on October 20, 2020 in Miami, Florida.

Joe Raedle | Getty Images

Procter & Gamble on Wednesday reported quarterly earnings and revenue that topped Wall Street’s expectations as price hikes helped offset higher commodity and freight costs.

On the heels of its strong performance, the company also raised its outlook for sales growth but said it expects inflation to weigh even more heavily on its fiscal 2022 results.

Shares of P&G rose 1.3% in premarket trading.

Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: $1.66 vs. $1.65 expected
  • Revenue: $20.95 billion vs. $20.34 billion expected

The consumer giant reported fiscal second-quarter net income of $4.22 billion, or $1.66 per share, up from $3.85 billion, or $1.47 per share, a year earlier. Analysts surveyed by Refinitiv were expecting $1.65 per share.

Net sales rose 6% to $20.95 billion, topping expectations of $20.34 billion. Organic revenue, which strips out the impact of foreign currency, acquisitions and divestitures, also rose 6% in the quarter. About half of that growth came from the benefit of raising prices on select products.

For fiscal 2022, P&G is now calling for 3% to 4% sales growth, up from its prior forecast of 2% to 4%. But the company didn’t change its outlook for earnings as it also predicted higher costs.

For the second consecutive quarter, P&G increased its inflation forecast. The company expects to pay $2.3 billion after tax on commodity costs and $300 million after tax on higher freight costs, up from last quarter’s outlook of $2.1 billion on commodities and $200 million on freight. Combined with a $200 million headwind from foreign currency, P&G is forecasting a $2.8 million headwind, or $1.10 per share, to its fiscal 2022 earnings compared with the year prior.

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