Price hike on the horizon for P&G as material costs rise (April 20)

April 20 (Reuters) – (This April 20 story corrects to say Always sanitary napkins from Whisper sanitary napkins in paragraph 5)

Procter & Gamble Co. (PG.N) said on Tuesday it would raise prices for some products in the United States to offset rising costs that were already weighing on its fourth quarter, after announcing a better-than-expected quarterly result.

The Cincinnati-based company joins a growing list of consumer product makers raising prices this year as they battle rising costs for everything from transportation to pulp and resin or edible oils and nuts. Read more

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P&G said that since it gave its first guidance for fiscal year 2021 last year, costs had increased by $400 million, including $125 million after-tax costs for commodities that will largely hit the fourth quarter and $200 million in higher transportation costs.

“Rates continue to rise. Drivers and rigs continue to be scarce. Ocean freight continues to be a premium. So we continue to see that pressure mount and impact the fourth quarter as well,” said Andre Schulten, P&G’s new chief financial officer. on a call.

The company said it will raise prices for products, including Pampers diapers and Always sanitary napkins, by half a figure this year.

A display of Pampers diapers is on sale in Denver February 16, 2017. REUTERS/Rick Wilking

P&G maintained its base earnings per share guidance for the full year for growth in the 8-10% range and sales in the 5-6% range.

The COVID-19 pandemic has boosted sales of P&G hygiene and laundry products for more than a year as consumers stockpiled essentials and cleaning supplies even as vaccines roll out.

Toilet paper sales slowed in the January-March period, but home usage remained above pre-pandemic levels, P&G chief operating officer Jon Moeller said.

Although there is a high risk of supply chain disruption and social unrest and economic distress in many parts of the world due to increased cases in emerging markets which could affect the growth of some categories, Moeller said he expects P&G’s sales and earnings to continue to grow and be very cash-generating.

Net sales rose 5% to $18.1 billion in the third quarter, with earnings per share of $1.26. Both beat analyst estimates.

P&G also raised its stock buyback plan for fiscal year 2021 from $1 billion to $11 billion. Its shares rose 0.3%.

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Reporting by Uday Sampath in Bangalore; Editing by Aditya Soni

Our standards: The Thomson Reuters Trust Principles.

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