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Consumer goods heavyweight Procter & Gamble saw its fiscal Q2 2023 earnings slip but maintained a higher organic fiscal sales growth.
Procter & Gamble (NYSE: PG) recently reported declining revenue and profit in its fiscal Q2 2023 earnings statement. On Thursday, the American multinational consumer goods corporation reported total revenue of $20.77 billion. This figure came slightly lower than the consensus estimates of $20.73 billion in P&G’s fiscal second quarter. The company also realized adjusted earnings per share of $1.59, which is on par with analysts’ expectations. A year earlier, P&G gained $1.66 in adjusted earnings per share.
The latest Procter & Gamble fiscal Q2 2023 earnings report also saw the consumer goods giant rake in a net income of $3.9 billion, excluding items. This is less than the $4.22 billion the company made in the fiscal second quarter of last year.
Higher Costs Drive Down Sales Volumes
P&G’s latest year-over-year (YoY) decline in earnings comes as the organization hoped to rely on higher prices to offset declining sales. However, this strategy turned out differently than expected, with P&G’s reported December 10% product price increase cutting sales volumes instead. P&G’s sales volumes slumped 6%, the most significant quarterly drop in years. In addition, the leading consumer goods company also experienced substantial foreign exchange headwinds for the given period.
All of Procter & Gamble’s divisions reported waning sales volumes in the 2023 fiscal second quarter. This unsavory development came about despite experiencing increases in organic sales due to the higher pricing.
Despite fiscal Q2’s gloomy sales volume, P&G slightly raised its outlook for organic fiscal 2023 sales growth to between 4% and 5%. This range previously stood at 3% to 5%.
Procter & Gamble Executives Reflect on Company Approach Following Fiscal Q2 2023 Results
Procter & Gamble’s chief executive officer, Jon Moeller, believes that against all odds, the company “delivered solid results in the second quarter of the fiscal year 2023 in what continues to be a very difficult cost and operating environment.” In addition, Moeller suggested that P&G continues to take a grounded approach to all its operational decisions for 2023. As he put it:
“The world seems to want everything to be better, as do I. That’s really not the reality… It’s not the time to be taking guidance to the top range of possibility.”
P&G finance chief Andre Schulten also echoed some of Moeller’s sentiments, explaining that the company remains on track. Schulten touched on the company’s sales volume declines, revealing that P&G had anticipated the drop. Furthermore, he explained that half of this decline was due to a combination of factors. These factors include P&G halting sales of most items in Russia and retailer inventory cutbacks in the US, Europe, and China.
P&G executives maintain their goal of performing a few percentage points better than the market. In addition, Schulten said that shoppers remain willing to pay more for high-end items. He further stated that a significant number of shoppers also seek out deals, and demand is up for both small and large products. According to Schulten, people do not stop doing their laundry or washing their hair.