Procter & Gamble lowered its full-year forecast on the back of lower sales and sky high tariffs on China. It also indicated that it would likely raise prices.
The Cincinnati, Ohio-based consumer products group, which makes Pampers, Tide, Olay and SKII, among other brands, now expects sales for fiscal 2025 to be flat. It previously forecast growth of between 2 percent and 4 percent.
Chief financial officer Andre Schulten said: “Our approach in the face of this near-term volatility is to protect our investment in our long-term health of our brands, innovation and demand creation. We are adjusting our fiscal year guidance in accordance with this approach.”
On tariffs, he told analysts that while China accounts for just over 10 percent of the group’s imports, the size of the tariff rate makes the cost impact more substantial.
At the beginning of the month, U.S. President Donald Trump unveiled sweeping punitive tariffs on around 60 countries, sending the markets into a tailspin. While he soon stepped back, authorizing a 90-day pause — “and a substantially lowered reciprocal tariff during this period” of 10 percent, he upped import duties on China-made goods to as high as 145 percent. Beijing responded with 125 percent on U.S. goods.
“We’ll be looking for every opportunity to mitigate the impacts, including sourcing flexibility and productivity improvements,” Schulten said. “We also need to consider some level of consumer pricing in affected categories and markets.”
For third quarter fiscal year 2025, net sales fell 2 percent to $19.8 billion versus the prior year. Analysts had penciled in $20.1 billion. Organic sales, which excludes the impacts of foreign exchange and acquisitions and divestitures, increased 1 percent versus the prior year.
A breakdown on that headline sales number showed that beauty segment organic sales increased 2 percent versus a year ago.
Within that, hair care sales were unchanged as increased pricing in Latin America and North America was offset by volume declines, primarily in Greater China. Skin care organic sales, meanwhile, declined low-single digits due to volume declines and unfavorable geographic mix. In the grooming segment, organic sales increased 3 percent versus year ago.
On a geographical basis, organic sales in North America grew 1 percent, below the 4 percent growth trend over the last five quarters, driven by weaker consumer demand.
Europe-focused market organic sales were up 1 percent, with the company singling out France as a “significant headwind” with organic sales down in the high teens in the quarter versus a base period that grew 20 percent.
Greater China organic sales declined 2 percent, which Schulten described as “a modest step up on the path back to growth in the region.”