Procter & Gamble Reports Disappointing Quarterly Revenue as China Demand Slows

Procter & Gamble (P&G) recently reported weaker-than-expected quarterly revenue, largely due to disappointing demand in China. This news caused the company’s shares to drop by 5% in morning trading. The company’s earnings per share came in at $1.40 adjusted, slightly higher than the expected $1.37. However, its revenue was $20.53 billion, falling short of the expected $20.74 billion.

P&G’s net income for the fiscal fourth quarter was $3.14 billion, down from $3.38 billion the previous year. Excluding certain items, the company earned $1.40 per share. While the company’s net sales remained stable compared to the previous year, its organic revenue (which excludes factors like foreign currency and acquisitions) increased by 2% in the quarter.

Despite the overall disappointing sales, there was a silver lining for P&G. The company experienced an increase in volume for the first time in over two years. Volume is a more accurate reflection of demand than sales since it excludes pricing. P&G’s volume rose by 1%, driven by stronger demand for its grooming, health care, and fabric and home-care products. These segments reported 2% volume growth for the quarter. However, the beauty and baby, feminine and family care divisions continued to struggle, with both units seeing a 1% decline in volume.

In North America, P&G is growing its market share, with volume in its home market rising by 4%. This indicates that consumers are not trading down to cheaper alternatives, as private label goods’ market share remains relatively flat. Additionally, P&G’s promotions are still 15% lower compared to pre-pandemic levels.

However, the company’s second-largest market, China, is still facing challenges. P&G did not disclose the region’s quarterly volume, but organic sales in Greater China fell by 9%. Executives cited weak underlying market conditions as the reason for the decline. The sluggish demand in China also contributed to volume declines in P&G’s beauty business.

Looking ahead, P&G expects core net earnings per share for fiscal 2025 to be in the range of $6.91 to $7.05. The company has reiterated its revenue outlook, expecting 2% to 4% growth.

In conclusion, while Procter & Gamble’s quarterly revenue fell short of expectations due to disappointing demand in China, the company did see a positive increase in volume for the first time in over two years. P&G’s North American market share is growing, but its beauty business continues to struggle. The company remains optimistic about its future earnings and revenue growth.