P&G to Hike Prices Over Rising Commodity Cost; Posts Robust Q3’21 Results

Summary

  • Prices will increase for P&G’s products in its baby care, feminine care and adult incontinence categories.
  • The consumer products company attributed the price hike to the impact for increasing commodity costs.
  • P&G’s net earnings grew 12 percent during the fiscal third quarter while revenue rose 5 percent year over year.

The Procter & Gamble Company (NYSE:PG) said it will raise prices some of its product categories after reporting a robust earnings results for the fiscal third quarter ended March 31.

The Cincinnati-based consumer products giant, which owns a number of brands including Ariel, Gillette, Head & Shoulders and Pampers, will increase prices in its baby care, feminine care and adult incontinence product categories across the U.S.

The prices will increase in the range of mid-to-high single-digit percent and will be effective from mid of September this year. The exact amount of the price change will vary by brand and sub-brand.

With this hike, P&G looks to cover a portion of the impact of rising commodity prices. During the company’s third-quarter earnings call, COO Jon Moeller noted that it is one of the bigger increases in commodity costs that the company has seen over the period.

P&G shares were up 0.83 percent on Tuesday to close at US$137.75. The company, which has a market capitalization of US$339.21 billion, has seen its share price surge approximately 12 percent in 2020.

Recently, Kimberly-Clark Corporation (NYSE:KMB) announced its plans to raise the price of most of its products over “significant commodity cost inflation.”

On Monday, The Coca-Cola Company (NYSE: KO) CEO James Quincey also reportedly said the beverage company will increase the prices on its drinks offset higher commodity costs.

Fiscal Third Quarter Results

Source: Pixabay

P&G posted a 12 percent year-over-year growth in its net earnings to US$3.27 billion during the three months ended March 31. Diluted earnings per share came in at US$1.26, compared to US$1.12 in the year-ago period.

Revenue totaled US$18.11 billion, up 5 percent from US$17.21 billion during the third quarter previous fiscal year.

Organic sales in the beauty segment, which includes skin and personal care products, increased 7 percent year over year. The grooming segment reported 4 percent growth in organic sales while the health care segment’s organic sales rose 3 percent during the quarter.

The fabric and home care segment also recorded a 7 percent growth in its organic sales. However, organic sales in the baby, feminine and family care segment decreased by one percent year over year.

Full year forecast

P&G did not update its outlook for the full fiscal year 2021. The company continues to anticipate its full-year sales to grow in the range of 5 percent to 6 percent.

Full-year core EPS is projected to increase between 8 percent and 10 percent. GAAP diluted net EPS is expected to grow in the range of 8 percent to 10 percent.

Meanwhile, P&G increased its common share buyback outlook for the year to US$11 billion from the previous forecast of US$10 billion. Together with the dividend expectation of more than US$8 billion, the company targets to return about US$19 billion to shareholders during this fiscal year.


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