Procter & Gamble Co forecast full-year earnings below analysts' estimates, as the consumer goods giant struggles with surging transportation and commodity costs, sending its share down about 4% in premarket trading.
Waves of the pandemic, clogged shipping ports and the Russia-Ukraine war have snarled global supply chains and led to a jump in prices of commodities including pulp, resin and polypropylene, pinching profits of consumer goods makers.
Companies' price hikes to offset those cost increases are also now being met with some resistance from major retailers, which are worried about waning consumer demand due to red hot inflation.
"As we look forward to fiscal 2023, we expect another year of significant headwinds," P&G chief executive officer Jon Moeller said in a statement.
The maker of Tide detergent forecast average fiscal 2023 earnings per share of $5.93, below analysts' view of $6.02, with the company estimating an about $3.3 billion hit from a stronger dollar and higher commodity and freight costs.
A stronger greenback typically eats into profits of companies such as P&G that have sprawling global operations and convert foreign currencies into dollars.
On an adjusted basis, the company earned $1.21 per share in the fourth quarter ended 30 June, missing analysts' estimates of $1.22 per share, according to IBES data from Refinitiv
The company said net sales rose 3% to $19.52 billion, beating analysts' estimates of $19.41 billion, as it benefited from higher prices of its detergents and homecare products.
Prices across P&G's brands, from Gillette to Old Spice, rose on average about 8% in the fourth quarter, while sales volumes fell about 1%.
The company forecast fiscal 2023 organic sales growth of 3% to 5%, compared to over 7% in 2022, signaling a slowdown in consumer demand.