PROCTER & Gamble reported sales and profit that surpassed analysts’ estimates as higher prices bolstered the business despite a lower volume of products sold.

Organic sales rose 7 per cent in the quarter ended Sep 30, the maker of Tide detergent and Pampers diapers said on Wednesday (Oct 18). Analysts had projected growth of 5.8 per cent, according to data compiled by Bloomberg. Profit also beat estimates. In the company’s statement, chief executive officer Jon Moeller said P&G is on track for the higher end of its organic sales and adjusted earnings guidance in the current fiscal year.

P&G’s results underscore shoppers’ willingness to continue spending in the face of persistent inflation and economic uncertainty. A 7 per cent increase in prices bolstered sales, offsetting global shipment volumes that dropped 1 per cent. In the US, volume rose by about 3 per cent, according to chief financial officer Andre Schulten.

“The consumer continues to be remarkably resilient,” Schulten said in an interview. “The consumer continues to choose P&G brands. We are growing volume share in the US.”

P&G’s portfolio, with various prices, gives shoppers a choice “depending on their ability and willingness to spend,” he said. “We do not see broad trade down.”

The shares rose 1.2 per cent in early trading on Wednesday in New York. Through Tuesday’s close, P&G stock has dropped 3.5 per cent this year.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

The report backs up data from the latest retail sales report, which showed robust US consumer spending in September. The labour market remains relatively strong, fuelling demand, which may prompt the Federal Reserve to raise interest rates again before the end of the year. Schulten said P&G continues to see labour inflation: “Ensuring that we are competitive in the market requires us to increase pay, so we’re doing that.”

P&G, which owns the Crest toothpaste brand, was helped by strength in its oral care and health-care categories. P&G reiterated its forecast for earnings per share of between US$6.25 and US$6.43 this fiscal year. Analysts project US$6.38.

Foreign-currency translation will hurt results for the Charmin toilet paper maker, with the impact this year expected to be about US$1 billion after taxes. In July, the company predicted about a US$400 million impact.

While the company is seeing broad sales strength across Europe, “we’re watching the European consumer a little bit more closely,” Schulten said. “Especially savings on the balance sheet of the consumer might be dwindling,” he added.

Gross margin was 52 per cent in the quarter, while analysts projected 49.3 per cent. The company forecast a benefit of about US$800 million this fiscal year from more favourable commodity costs. While energy costs are rising, resins and pulp are helping to offset that, Schulten said, adding that the company is watching to see if the oil markets react to the Israel-Hamas war.

In the Middle East, P&G is focused on employee safety and providing essential products for customers and communities, he said. “Our supply chain in the Middle East and in the area generally is stable,” Schulten said. “But it really is a question of: ‘Are stores open?’” he said. “For us, there’s no disruption in ability to supply.”

Weakness prevailed for P&G in China during the quarter, with negative shipment volumes. “General outlook of the economy is certainly weighing on consumer sentiment there,” Schulten said. BLOOMBERG