Procter & Gamble Co. organic sales surpassed estimates on higher volume, a change from earlier quarters where most of the companyâs growth came from price hikes.
Organic sales rose 3 percent in the three months ended Dec. 31, P&G said Wednesday, the biggest increase in three quarters. Most of that was due to higher volume, meaning retailers bought more essentials like Dawn dish soap and Gillette razors to restock their shelves. Prices were unchanged compared with the year-earlier quarter, the first time they havenât risen since 2019.
The shares rose as much as 2.6 percent as of 12:10 PM in New York.
The results suggest that the era of endless price hikes may be waning. Companies that make consumer package goods have for years counted on price increases to help fuel revenue growth. In P&Gâs fiscal year that ended last June, prices were 4 percent higher compared to the year earlier, when prices were also elevated.
Other major companies are also signalling that price hikes are starting to taper off. Coca-Cola Co. has said that price increases on its sodas, juices and other beverages this year will be lower than the past few years.
In an interview with Bloomberg Television at the World Economic Forum in Davos, the companyâs new chief operating officer, Henrique Braun, said that Coca-Cola expects increases in pricing âto be more moderate.â
Companies are under pressure to slow inflation as President Donald Trump takes office. In an executive order issued Jan. 20, Trump said consumers are facing a âcost-of-living crisisâ and that itâs âcritical to restore purchasing power to the American family.â
âWe see consumers trading up,â Andre Schulten, P&Gâs chief financial officer, said in an interview. âTheyâre trading into either bigger pack sizes or theyâre trading into higher-value items.â
Schulten said P&G is responding to the cost-of-living crisis reflected in Trumpâs executive order by innovating on less-expensive items, such as Luvs baby diapers, which were relaunched with an upgraded diaper last year.
âWe recognised the consumer was looking for more innovation on the value tier,â he said. âThe consumer is responding. We are growing share.â
P&G said innovation helped drive growth in its grooming and oral-care businesses. The company has been creating new products that it can charge more for, including all-over body deodorant and razors for different body parts. P&G has also been trying to get its products on more end caps in retail stores to encourage more impromptu purchases.
âWe believe P&G remains one of the best-positioned CPG companies to deal with the volatility that has come to define the past few years and most likely the next few years,â RBC Capital Markets analyst Nik Modi said in a research note Wednesday.
Sales were also bolstered by P&Gâs fabric and home care segment â the companyâs largest business which includes the Tide and Swiffer brands â and double-digit gains in the segment that makes Bounty paper towels and Charmin toilet paper. P&G said some consumers stocked up on paper products in October during the port strike and hurricane.
Meanwhile, the beauty division was hurt by volume declines in Greater China, where P&G has said lower consumer confidence is weakening the business. Schulten said organic sales in China were down 3 percent for the quarter. P&G believes it will take some time before the China business returns to consistent growth.
The company reiterated its guidance for sales and profit in the current fiscal year, which goes through the end of June.
P&G is among the first consumer companies to report earnings in the US. It gets roughly half of its revenue from North America.
Like other consumer-staples companies, shares of P&G have underperformed the broader market over the past year. The stock had gained less than 10 percent in the 12 months ended Jan. 21, compared with a 25 percent increase in the S&P 500.
By Leslie Patton
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