P&G to raise prices on select products

PROCTER & Gamble (P&G) said on Thursday it would raise prices on some products to cover the impact on input costs from the trade war and lowered its annual forecasts, as consumers cut back spending due to economic uncertainty.

United States President Donald Trump's sweeping tariffs have roiled global markets and led to fears of a recession in the US, the biggest market for P&G, whose products include Tide detergent.

"We will have to pull every lever we have in our arsenal to mitigate the impact of tariffs within our cost structure and P&L," said CFO Andre Schulten on a call with reporters.

Pricing and cost cuts were the main levers, Schulten said, as changing raw material sourcing from China would be complex and difficult in the short term, mainly due to lack of options.

Shares of P&G were down nearly 5 percent in early afternoon trading as the company also posted a bigger-than-expected fall in third-quarter revenue.

P&G imports raw ingredients, packaging materials and some finished products into the United States from China, while the vast majority of what it sells is produced domestically, a company spokesman told Reuters.

China accounts for just over 10 percent of its import exposure, but the 145-percent tariff makes the impact more substantial, Schulten said.

As sentiment takes a hit in the US and global supply chains unravel, several companies have either cut or withdrawn their annual expectations.

P&G, a bellwether for consumer goods demand, saw US shoppers slow their spending in February and March. North America accounted for 52 percent of its net sales in 2024.

It now expects total net sales for 2025 to be roughly in line with last year, compared with a prior target of 2-percent to 4-percent growth.

After raising prices significantly over the last few years, P&G executives had said they would rely less on the strategy to grow sales. The company raised prices by 1 percent in the third quarter, while volumes fell 1 percent.

P&G said it would sell new products at higher price points and look to raise prices for some existing ones, while aiming to innovate across products such as its new Crest whitening toothpaste and Tide Evo detergent pods.

"It comes down to how much of these costs are companies willing to pass on so that they can maintain their earnings versus how much the consumer is going to push back and erode the top line," said Don Nesbitt, senior portfolio manager at F/m Investments, which holds shares in P&G.

P&G, whose products command a premium on the shelves of retailers like Walmart and Target, faces a growing threat from the stores' private label brands.

Schulten said it was too early to speculate on how much pricing the world's biggest maker of household staples would take, and that it is now planning for its next fiscal year which begins in July.

Rival Reckitt on Wednesday posted a decline in sales volumes in Europe and North America, while Kleenex tissue maker Kimberly-Clark cut its annual profit forecast earlier this week.

In contrast, fellow consumer goods bigwigs Nestlé and Unilever topped quarterly sales expectations on higher prices for the former's packaged foods business and Unilever's top brands such as Dove soap and Vaseline.

P&G expects annual core earnings per share in the range of $6.72 to $6.82, down from its prior target of $6.91 to $7.05.

Its third-quarter net sales fell 2 percent to $19.78 billion, compared with expectation of a 0.44-percent drop, according to data compiled by LSEG, while adjusted earnings per share of $1.54 beat estimates by 1 cent.