P&G cuts outlook as consumers pull back amid tariffs

A plant wall with Procter & Gamble’s logo is pictured at the entrance to the company’s highly automated cleaning products factory in Tabler Station, West Virginia, U.S., May 28, 2021. REUTERS/Timothy Aeppel/File Photo

NEW YORK, United States — Procter & Gamble cut its sales and profit forecast Thursday, citing a pullback in consumer behavior as uncertainty over tariffs and the economy cloud the picture.

P&G, whose brands include Tide detergent and Crest toothpaste, now sees flat sales for its current fiscal year after previously projecting growth of as much as 4 percent.

Executives also signaled likely price increases due to tariffs after trimming the full-year profit increase to a range of 6 percent to 8 percent per share from the prior 10 percent to 12 percent range.

The company has seen a negative shift in consumption in recent weeks in both the United States and Europe compared with the prior 12 months, said Andre Schulten, chief financial officer of the consumer products giant.

Consumers are adopting a “wait and see attitude” as they monitor stock market gyrations in light of tariff headlines and weigh uncertainty around the job market, mortgage rates and other factors, Schulten said.

“We saw traffic down at the retailers and we saw consumers basically looking for value,” Schulten said on a conference call with reporters.

“All those behaviors impact our top line,” he said of the revenue outlook. “The main driver is a more nervous consumer reducing consumption in the short term.”

Quarter ending March

For its third fiscal quarter ending March 31, P&G reported essentially flat profits of $3.8 billion. Revenues dipped 2 percent to $19.8 billion.

As far as tariffs, Schulten said most of P&G’s production is close to the consumption market, but some goods are made with raw materials from China that are now subject to hefty US tariffs.

In the short run, such items are difficult to replace, he said.

“Once we have clarity on what the structural tariff environment is… that’s when companies can be more active in looking at formulations, in looking at sourcing,” he said.

P&G Chief Executive Jon Moeller told CNBC Thursday morning that the company would probably lift prices in light of tariffs, which he characterized as “inherently inflationary.”

Schulten said it was “premature” to estimate the size of price increases, noting it will depend on the specific products and a fast-changing environment in terms of tariffs and counter-tariffs.

Shares of P&G declined 0.8 percent in pre-market trading.

READ: US March retail sales surged as consumers sought to beat tariffs