Procter & Gamble rose 5.58% after shoppers bought 2.4% more of its products

Procter & Gamble closed Thursday at US$165.59, up 5.58%. The maker of Tide, Pampers and Gillette rallied on a day tech shares slumped, and Johnson & Johnson and Coca-Cola rose with it.

So why did a soap company have the better day? Sales in the September quarter rose 4% to US$23.3 billion. Core earnings came to US$2.00 a share, against about US$1.89 expected.

The detail investors liked was volume. P&G sold 2.4% more by quantity, while price rises added only 0.4 of a percentage point to sales.

Chart: P&G's September-quarter sales reach US$23.3bn. Procter & Gamble's revenue in the July-to-September quarter, the first of its financial year, 2017 to 2026, in US$bn. A year earlier it was 22.4. — This story’s chart of the day: the numbers, the dark version and the animated version are on its own page. The chart’s page →

Chief financial officer Andre Schulten called American shoppers "remarkably resilient". He added that lower-income households are being more careful.

Costs are the weak spot. Gross margin fell 1.6 percentage points, and P&G expects commodities to cost it about US$1.4 billion after tax this financial year. That estimate assumes Brent crude at US$100 a barrel, and Brent closed Thursday above US$113.

A word of caution

P&G kept its forecast for core earnings of US$6.89 to US$7.11 a share. Schulten said the cost hit will keep growing if oil stays where it is. The next quarterly update is where the US$100 assumption gets tested.

This story ran in Chips Down, Soap Up Friday 23 October’s edition, with the market snapshot, the other two stories, the numbers and the week ahead. Read the whole edition →

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