Procter & Gamble said Tuesday that while pricing is largely fueling sales growth, shoppers stepped up the volume of items purchased across several categories such as hair and family care.
P&G's organic sales rose 4% in its second quarter from the prior-year period. The sales metric excludes the impact of currency fluctuations, acquisitions and divestitures.
P&G Shares Rise 2.9% in premarket trading.
"It's now shifting to more of a combination of price-driven growth and volume-driven growth," said Andre Schulten, the company's chief financial officer, in an interview. "Over time that volume component should strengthen."
The maker of products like Tide detergent, Bounty paper towel and Crest toothpaste is seeing accelerating growth in sales volume in North America, Schulten said. Some measures of U.S. consumer sentiment are showing improvement after the lingering effects of the Covid-19 pandemic and concerns about a recession dented confidence.
The benefit from consumers stepping up purchases isn't happening evenly for P&G, which sells products in roughly 180 countries and territories. China has been a challenging market for the company in recent months. Late last year, P&G said it would revert to Nigeria being an import-only market and divest its fabric and home-care businesses in Argentina.
Analysts are watching P&G and its peers to determine whether they will be able to maintain pricing levels as inflation cools. For some food and snack companies, the volume of purchases has slowed, and they are starting to cut prices on some items. Other consumer-goods makers such as Clorox and Colgate-Palmolive are slated to release quarterly earnings over the next few weeks.
Shares in P&G have gained 3% over the past 12 months, compared with a 22% gain in the S&P 500.
Further growth in P&G's sales volume could be driven by people adding new products to their daily routines, Schulten said. He pointed to fabric enhancers as an example: Only 35% of households in the U.S. use liquid fabric enhancers, and in those households they only use it for 65% of laundry loads. It also plans to continue innovating in products that are already fixtures in millions of consumers' homes.
In the second quarter ended Dec. 31, the Cincinnati-based company said its sales rose 3% to $21.44 billion. Analysts polled by FactSet had expected $21.48 billion.
Earnings fell 12% to $3.47 billion, or $1.40 a share. Part of the decline came from P&G booking a $1.3 billion charge on its Gillette business.
Excluding the impact of the charge, P&G earned $1.84 a share, which came in stronger than analysts had forecast. A decline in commodities costs helped blunt the impact of the write-down.
The company on Tuesday also maintained its outlook for organic sales to increase 4% to 5% in the year ending June 30.
