Procter & Gamble topped market expectations for quarterly sales and profit on Wednesday, benefiting from higher prices as well as steady demand for its personal care products and cleaning supplies.
While P&G's moves to consistently raise prices over the past several months have dented sales volumes with some cost-conscious shoppers turning to cheaper alternatives, the benefits from higher prices have helped bolster its profits.
The price hikes along with easing commodity costs and a more stable supply chain have aided a steady a recovery in the Pantene shampoo maker's margins, despite being weighed down by a stronger dollar.
Gross margin improved 460 basis points to 52% in the quarter ended Sept. 30 and the company kept its annual profit outlook despite expectations for a $1 billion after-tax impact from unfavorable foreign exchange rates.
P&G was on track to achieve the higher-end of its organic sales and core profit forecasts, CFO Andre Schulten said, adding that it has invested heavily in brands in the first quarter and will keep boosting marketing spend to keep demand intact.
Known for products including Gillette razors, Oral-B toothbrushes and Dawn dish soap, P&G saw overall prices jump 7% in the first quarter, while total sales volume dropped 1%, consistent with levels seen in the prior quarter.
"The fact that despite the dollar strengthening and the company facing a greater currency headwind, they're still able to maintain their guidance and even suggest that they might achieve the higher end of it, is a win for investors," said Jason Benowitz, senior portfolio manager at CI Roosevelt.
Shares of the company were up 2% in premarket trading.
P&G now expects sales growth to be in the range of 2%-4% for fiscal 2024, compared to its prior estimate of a 3%-4% rise, owing to currency fluctuations.
The consumer goods giant has consistently topped market expectations for sales for more than three years so far, with first-quarter net sales rising 6% to $21.87 billion, compared to analysts' estimate of $21.58 billion, according to LSEG data.
Per-share profit of $1.83 per share also beat expectations of $1.72.