Procter & Gamble CFO reassures on forward guidance despite fears of a slowdown

Published Thu, Sep 8 20223:59 PM EDTUpdated Thu, Sep 8 20224:06 PM EDT

No preannouncement news is good news from Club holding Procter & Gamble (PG) after two consumer-focused companies, McCormick (MKC) and Newell Brands (NWL), announced profit warnings around their presentations at the Barclays Global Consumer Staples Conference this week. P & G Chief Financial Officer Andre Schulten spoke at the Barclays conference Thursday and addressed some Wall Street concerns we wrote about pertaining to meeting full-year guidance. He said that $6 billion of inflation, foreign exchange and transportation headwinds "hurts over the last year and expect it for this fiscal year." He added, however, "We're well set up to deal with it within the guidance range we've given." Schulten drilled down further on the muted impact of consumers trading down and buying cheaper products due to decades-high inflation, supply chain and transportation cost improvements, and the still-troublesome strong dollar. Here's a look at what he said and what we think at the Club as shareholders in P & G. Consumers not trading down Schulten said he doesn't see anything "structural" changing as consumers continue to choose P & G brands over less expensive brands when faced with rising prices. "We don't see huge element of trade down where we are challenged from a share perspective," he explained. Market share across the company's products is "stable to growing, so all of that is working as we intend," he added. Two reasons that P & G cites are innovation and value. The CFO said, for example, "Laundry detergent with fabric enhancers provides great value to the trade, great value to the consumer and we drive regimen trial. That regimen trial expands the market leads to repeat. So, for us, that's a core strategy instead of going on single liquid merch, we drive regimen." Schulten said that communicating what differentiates P & G offerings is critical as the company competes on price with "the peer group in every market around the world." Transportation costs easing "We see some good news on commodity input costs sequentially. So that's a little bit of help versus the numbers that we're underlying our guidance," Schulten said. "Transportation in the U.S. is easing a little bit. So, the load-to-driver ratio has come down. It's reflected in lower spot rates, which starts to translate into contract rates. So that's a little bit of effect rates. So that's a little bit of help." In fiscal fourth-quarter