By Deborah Mary Sophia
(Reuters) -Procter & Gamble said it would achieve the higher end of its annual sales and profit forecasts as consumers absorb higher prices for its personal care products and cleaning supplies, helping it beat first-quarter expectations on Wednesday.
While multiple rounds of price hikes have dented the volume of sales, the company said it was stabilizing and would start to pick up through the rest of the year.
"The consumer continues to be remarkably resilient," finance chief Andre Schulten said, ruling out an immediate ramp-up in promotions as it was yet to see a significant change in consumer choices.
"If anything, consumers...continue to trade up within our portfolio."
The price hikes along with easing commodity costs and a more stable supply chain have helped a recovery in the Pantene shampoo maker's gross margins, which grew 460 basis points to 52% in the quarter despite a stronger dollar.
The company's aim to hit the top-end of its annual forecasts despite a potential $1 billion after-tax impact from unfavorable foreign exchange rates lifted its shares more than 2%.
Known for products including Gillette razors, Oral-B toothbrushes and Dawn dish soap, P&G's volumes in the U.S. grow 3% in the quarter ended Sept. 30. Overall prices jumped 7%, while total sales volume dropped 1%.
Benefits from price hikes are expected to taper as the year progresses, P&G said, unlike beverage giant PepsiCo (NASDAQ:PEP) which last week noted it planned "modest" price increases next year.
P&G said it has not experienced any big pushback from retailers on pricing.
"That they're not mentioning a super soft consumer or that volumes are falling off a cliff, and the fact that people continue to accept their price increases just tells me that the consumer is in OK shape," said Razmig Pounardjian, portfolio manager at Carnegie Investment Counsel.
The company's underlying market growth in China, however, was "soft and choppy" due to weak consumer confidence. P&G expects the market to return to mid-single-digit growth "over the coming periods".
It expects fiscal 2024 sales growth in the range of 2%-4%, compared to its prior estimate of a 3%-4% rise, owing to currency fluctuations.
The consumer goods giant has consistently topped market expectations for sales for more than three years.
Its first-quarter net sales rose 6% to $21.87 billion, beating LSEG estimates of $21.58 billion, while per-share profit of $1.83 also surpassed expectations.