Procter & Gamble combats inflation with price hikes in most categories

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Rising input costs will be a $2.1B headwind

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The Procter & Gamble Company is set to raise prices across the board to counter broad-based and persistent inflation Pressure

The Cincinnati-based consumer goods maker estimates the company will raise $2.1 billion in the current fiscal year due to cost increases. A further blow of $200 million is expected from freight and transportation costs.

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PG Procter & Gamble Company Limited 140.66 -1.68 -1.18%
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“We will offset a portion of these higher costs with price increases and productivity savings,” said CFO Andre Schulten on the company’s first-quarter earnings call. “The degree and timing of these moves are very specific to the category, brand and sometimes a brand’s product, it is not a one-size-fits-all approach.”

Procter & Gamble has announced price increases in nine out of 10 product categories.

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The mid-single digit price hike has already been implemented for the company’s baby, feminine care and family care products. Similar increases are planned over the next 90 days for grooming, skin care, oral care and other products in the company’s portfolio.

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“As this price reaches store shelves, we will be monitoring consumption trends closely,” Schulten said, adding that the company has yet to see a “significant change in consumer behavior.”

Procter & Gamble, like many other companies, has hiked prices on consumers to offset rising costs caused by supply-chain issues and material and labor shortages coming out of the pandemic.

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Producer prices rose 0.5% in September. They were up 8.6% from the previous year, setting a record for the sixth consecutive month.

Higher prices weighed on the company’s first-quarter net income, which fell 4% year over year to $4.11 billion, or $1.61 per share. Meanwhile, net sales rose 5% to $20.34 billion. This included organic sales growth of 1%, helped by a recently implemented price increase on products such as Pampers diapers.

Shares of Procter & Gamble were up 2.3% Monday this year, compared to the S&P 500’s 19% gain.


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