P&G says strong consumers are paying more for products, fueling earnings beat and higher guidance

P&G is coming off a strong fiscal second quarter in which its bet on raising prices paid off, helping to drive sales past investors' expectations. Read more...

Procter & Gamble on Tuesday reported quarterly earnings and revenue that beat analyst expectations, as strong consumers continue to pay up for its products following price increases earlier this year.

“In our categories, we see generally good health and strong consumption,” Chief Financial Officer Jon Moeller said in an interview with CNBC’s Becky Quick and Wilfred Frost on “Squawk Box.”

Despite concerns of a potential economic slowdown, P&G continues to see strong growth in China and the U.S, Moeller said.

Shares of the company were down 1.2% in premarket trading.

Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: $1.06 adjusted, vs. $1.03 expected
  • Revenue: $16.46 billion vs. $16.37 billion expected

Excluding items, P&G earned $1.06 per share, beating the $1.03 per share expected by analysts surveyed by Refinitiv.

Net sales rose 1% to $16.46 billion, topping expectations of $16.37 billion.

“This is third quarter in a row of very strong volume, sales, consumption and market share growth being driven by a strategy of superiority,” Moeller said.

Its strongest business units continue to be its beauty care business, which includes its premium SK-II skin-care brand and Olay. Fabric and home care and health care, which includes Crest toothpaste, also performed well.

Its grooming business, which includes its Gillette brand, continued to lag, although its sales declines moderated from the prior quarter. Organic sales in its grooming business dropped 1%, compared with a 3% decline in the second quarter.

The company said sales of shaving care products were in line with the year-earlier period, but benefited from higher sales in more developed areas and price increases, which helped offset unit volume declines. Unit volume factors out the impact of price and currency fluctuations

P&G, whose products also include Tide detergent, said it now expects its 2019 organic sales to grow 4%, rather than be in range of up 2% to 4%. Total sales are expected to be flat to up 1% over 2018.

Correction: A previous version of this story misstated its sales forecast for the year and the fiscal year in a headline. P&G expects its 2019 organic sales to grow 4%, rather than be in range of up 2% to 4%. Total sales are expected to be flat to up 1% over 2018. The company is reporting fiscal 2019.

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