Procter & Gamble (NYSE:PG) on Tuesday reported quarterly earnings and revenue that topped analysts’ expectations, but higher costs weighed on the company’s profits.
The consumer giant also raised its forecast for commodity and freight costs for the remainder of the fiscal year, warning that it believes inflation is still increasing.
P&G reported fiscal first-quarter net income of $4.11 billion, or $1.61 per share, down from $4.28 billion, or $1.63 per share, a year earlier. Analysts surveyed by Refinitiv were expecting earnings per share of $1.59.
Net sales rose 5% to $20.34 billion, topping expectations of $19.91 billion. Organic revenue, which strips out the impact of acquisitions, divestitures and foreign currency, increased by 4% in the quarter.
Price hikes on some of P&G’s products, like Pampers diapers, contributed to organic sales growth by 1%. Higher prices offset increased freight costs during the quarter but couldn’t keep up with climbing commodity costs. P&G CFO Andre Schulten told the Wall Street Journal that the company would raise prices on even more staples to deal with inflation.
P&G said that it now expects after-tax commodity costs of $2.1 billion and freight costs of $200 million to weigh on its fiscal 2022 results. Last quarter, the company forecast that commodity and freight costs would hit its earnings by $1.9 billion.
Despite higher costs, P&G reiterated its prior forecast for full-year earnings and revenue. P&G is calling for fiscal year sales to grow 2% to 4% from the prior year and core earnings per share to increase by 3% to 6%.
PG shares dipped $2.05, or 1.4%, to $140.29.
