P&G sees higher costs on transportation, commodities
New York (AFP) –
Procter & Gamble reported Tuesday another quarter of increased sales, but lifted its estimate on annual cost inflation amid supply chain difficulties, putting pressure on shares.
The consumer products giant, whose brands include Bounty paper towels and Crest toothpaste, now sees a $2.3 billion hit in costs over the current fiscal year, up from the prior $1.9 billion estimate.
"The input cost pressures are really broad based," P&G Chief Financial Officer Andre Schulten told reporters at a briefing, describing the current market as "a very challenging cost environment."
Key drivers for higher costs include lengthy delays at US ports that have prompted companies to increase inventories; and factory outages tied to Covid-19 lockdowns and tropical storms that have pinched supply.
Schulten said P&G was spending more on a variety of items, including chemical resins, pulp packaging and, more recently, energy and diesel.
"We don't expect any easing in terms of commodity cost pressures for our planning," he said.
At P&G, profits for the quarter ending September 30 were $4.1 billion, down four percent, on a five percent jump in sales to $20.3 billion.
The results included especially strong increases in North America in some categories as more of the economy reopened.
The hit from higher costs to corporate profits has been one of the worry points for investors heading into earnings season. In many instances, companies resist passing on all of the costs to consumers because of worries about losing market share, analysts say.
At P&G, of the five percent rise in sales in the most recent quarter, one percent was tied to higher prices.
Schulten said P&G had notified retailers of price increases in some categories such as oral care, skin care and grooming.
P&G shares fell 1.8 percent to $139.84 in pre-market trading.
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