Organic growth hit 4% for the quarter ended in September, the quickest pace in three years. The beat came mostly from selling more units, a sign that smaller price increases are still bringing in cost conscious shoppers even as the company faces cost pressure tied to the Middle East conflict.
Pricing added less than 1% to sales, while volume contributed 2.4%. Earnings excluding certain one offs were flat from a year ago, better than expectations for a 5% decline and reversing the drops reported in July. P&G kept its full year sales and profit targets and flagged more volatility ahead.
The stock rose as much as 5.9% at the open in New York on Thursday, the biggest intraday gain since 2020. Through Wednesday's close, the shares were up 9.4% this year, trailing the S&P 500 Index's 13%.
Material and freight bills are still rising, though P&G said its productivity push is limiting some of the impact. The company maintained guidance on organic revenue and earnings for the full fiscal year, while increasing its projected commodity costs to 1.4 billion dollars from 1.0 billion. When you add in elevated borrowing costs and currency effects, the combined hit is expected to shave about 11% from earnings growth. Schulten noted that, across the sector, price increases are the prevailing response, as alternatives don't make up for commodity pressure at this magnitude. He added, "We will be closely watching consumer demand as high fuel and energy costs persist into the fall and winter."
Earnings season has been mixed for consumer names. PepsiCo showed weakness in North America, while McCormick got a lift as budget minded shoppers cooked at home more. Overall US spending is holding up despite higher everyday costs, though September retail sales eased slightly as gas outlays increased.
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A volume led beat, minimal pricing, steady profits and rising input and currency headwinds. P&G kept guidance and pointed to choppier quarters ahead, which underscores how category strength and scale can support share even as costs bite.
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