Procter & Gamble lowers annual forecasts on trade war

Procter & Gamble (P&G) on Thursday lowered its annual sales and profit forecasts after reporting a bigger-than-expected drop in third-quarter net sales as consumers slashed spending due to economic uncertainty over the US-fuelled trade war.

The US consumer goods company’s were down as much as 3% in premarket trading.

US President Donald Trump’s sweeping tariffs on imports have left global markets reeling and given rise to fears of a recession in the US, the biggest market for P&G, whose products include Pampers, Oral B and Gillette. As sentiment is buffeted and global supply chains unravel, several companies have lowered their expectations for the year as consumers see their budgets being stretched.

A P&G spokesperson said the company saw US shoppers slow their spending in February and March in particular. The firm, a bellwether for consumer goods, now expects total net sales for fiscal 2025 to be roughly in line with the prior fiscal year, compared with its earlier target of 2% to 4% growth.

Those expectations include some assumptions about the affect of tariffs, the spokesperson said, adding the company still does not know the full extent of how the effect on costs.

P&G imports raw ingredients, packaging materials and some finished products from China, while goods it makes in the US and exports to Canada could also be hit by tariffs, the spokesperson said.

Still, about 90% of what P&G sells in the US is produced domestically, the spokesperson added.

P&G previously said it may have to increase prices to offset tariffs.

Sellers of consumer staples such as toilet paper and dishwashing liquid are typically considered safe havens during turbulent economic times, under the assumption that consumers will continue to buy necessities.

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

P&G competitor Reckitt on Wednesday reported a decline in sales volumes in Europe and North America. Kleenex tissue maker Kimberly-Clark also cut its annual profit forecast earlier this week and said it would incur about $300m in costs this year due to the trade tariffs.

In contrast, fellow consumer goods giants Nestle and Unilever topped market expectations for quarterly sales, boosted by higher prices for the former’s packaged foods business and Unilever’s top brands such as Dove soap and Vaseline.

After steep price increases the past several years, P&G executives have said they will rely less on that strategy to grow sales. The company raised prices by 1% this quarter, and volumes fell 1%.

The company 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.

P&G’s third-quarter net sales fell 2% to $19.78bn, compared to analysts’ average estimate of a 0.44% decline to $20.11bn, according to data compiled by LSEG.

The company has faced weak demand through this fiscal year in China due to a choppy macroeconomic background. That has hurt overall volume growth, even as P&G invests in introducing new products and different price tiers in markets such as the US and Latin America.

Reuters