Procter & Gamble has a strong first quarter

Higher prices haven’t hurt Procter & Gamble’s (P&G) outlook. The manufacturer of such household names as Tide detergent and Dawn dish soap reported net sales of $21.9 billion for the first quarter of fiscal year 2024, a 6% YoY increase. Its earnings per share came in at $1.83, 17% higher than last year.

The company had “a very good start to the fiscal year across top-line, bottom-line, and cash,” CFO Andre Schulten said in an earnings call.

Volumes were down 1% for the quarter, offset by a 7% increase in prices. The company hasn’t gotten pushback from retailers about the price hikes “beyond normal discussions on how to maximize value for their shoppers,” Schulten said, and customers seem willing to absorb them. “The consumer continues to be remarkably resilient,” he said, noting that the company’s portfolio includes premium, midrange, and value-priced products, so that consumers feeling strapped can choose less expensive options.

But so far, Schulten said, consumer preferences haven’t changed. “If anything, consumers that are choosing P&G products continue to trade up within our portfolio.”

P&G maintained its EPS guidance for fiscal year 2024, in the 6%–9% range, and kept its organic sales guidance in the 4%–5% range. It adjusted its sales growth guidance to a range of 2%–4% in anticipation of unfavorable foreign exchange rates. The company forecast $1 billion in losses to foreign exchange rates in 2024, $600 million more than it anticipated earlier in the year, Schulten said, but also expects to save $800 million after tax on commodity prices.

China turmoil to continue: China, whose economy is suffering from low consumer spending, decreased exports, high youth unemployment, and a housing crisis, was a gloomy spot in P&G’s generally positive earnings call. Total market volume there has fallen between 7% and 9% for the last few quarters, Schulten said, noting that “we don’t expect the China recovery to be quick, extensive, or linear.”

But Schulten said China remains “an attractive place for us to do business,” and that the company predicts the number of middle-income Chinese consumers to grow from 450 million to 700 million in the next five years. China is an important market for P&G, though not its most critical: Just under a tenth of P&G’s sales come from China, compared with 50% from North America, according to the Wall Street Journal.