Procter & Gamble Co beat quarterly sales estimates on Friday, helped by higher demand for its skin and health care products, but warned that rising commodity and freight costs would take a nearly $2 billion bite out of its earnings this year.
Shares of the company, which makes Gillette, Oral-B and Pampers products, were up 0.8% at $140.59 in premarket trading.
The vaccine-aided easing of COVID-19 restrictions in the United States and parts of Europe helped Procter & Gamble post an 11% increase in sales at its beauty segment in the reported quarter, as consumers returning to social events, spent more on personal care products.
“As we look forward to fiscal 2022, we expect to continue to grow top-line and bottom-line … despite a challenging cost and operating environment,” outgoing Chief Executive Officer David Taylor said.
Taylor’s replacement, Chief Operating Officer Jon Moeller, will now have to deal with soaring commodity and transport costs caused by pandemic-related disruptions, that led other consumer goods giants, including Unilever and Reckitt Benckiser Group, to warn of cost pressures.
Procter & Gamble said it expects a $1.9 billion after-tax hit due to higher commodity and freight costs this year, partially offset by foreign exchange benefits of about $100 million.
The company forecast fiscal 2022 core earnings per share to rise between 3% and 6%, or about $5.82 to $6.00. Analysts were expecting a full-year profit of $5.90 per share, according to IBES data from Refinitiv.
Procter & Gamble said net sales rose 7% to $18.95 billion in the fourth quarter ended June 30, compared with estimates of $18.41 billion.
The company reported core earnings of $1.13 per share, beating estimates of $1.08 per share.