Soap suds are seen on the side of a bottle of Procter & Gamble Co. Olay brand body wash arranged for a photograph in Tiskilwa, Illinois, U.S., on Monday, Oct. 24, 2016. Procter & Gamble Co. is scheduled to release earnings figures on October 25. Photographer: Daniel Acker/Bloomberg
© Bloomberg

Procter & Gamble has become the latest consumer goods company to benefit from charging higher prices, as it posted its strongest quarterly sales performance in eight years and lifted its top line outlook for 2019. 

The maker of Fairy Liquid, Tide and Pampers has long grappled with changing shopper demands, the rise of retailers’ private label brands and shifts in advertising patterns.

Rising commodity and transport costs have added to the pressure. In response P&G has in recent months raised prices on a wide range of household products.

Results published on Tuesday showed the price increases helped lift the company’s quarterly organic revenues 5 per cent higher year-on-year, the largest increase since 2011, with rises in four of P&G’s five product categories. Beauty and fabric and home care led the way, up a respective 9 and 7 per cent.

However, unfavourable foreign exchange movements meant overall net sales rose a less robust 1 per cent from a year ago, to $16.5bn in the three months to the end of March.

A wide range of consumer companies from Nestlé to Unilever are charging more for everyday household products, ending a long period of discounting as they seek to bolster revenues. The trend helped P&G’s rival Kimberly-Clark post stronger than expected earnings this week. 

P&G increased its guidance for organic sales growth in 2019 as a whole from between 2 and 4 per cent to a “solid” 4 per cent. “It’s been a long time since we’ve had that kind of guidance strength,” said Jon Moeller, chief financial officer.

Even so, the Ohio-based company still expects a $1.4bn “after-tax headwind” from foreign exchange movements and higher commodity and transport costs.

It left unchanged profits guidance for the full year, for a rise in core earnings per share of 3-8 per cent.

Shares fell 2.7 per cent on Tuesday, paring the rise over the past year to 41 per cent. 

Mr Moeller told reporters that the company felt under pressure to innovate to stay competitive. Grooming, for instance, was “an industry where we must constantly innovate to say ahead”.

Organic sales in grooming were down 1 per cent for the quarter. Even there, higher prices helped offset a bigger 3 per cent decline in volumes. Average prices were up 1 and 3 per cent in each of P&G’s five product categories, led by baby, feminine and family care products.

Net earnings jumped 9 per cent $2.8bn in large part due to a lower tax bill. That was equivalent to $1.04 per share on a diluted basis compared with $0.95 last time.

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