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Procter & Gamble tops earnings estimates amid inflation, price hikes

Yahoo Finance's Brian Sozzi and Julie Hyman break down Procter & Gamble's latest earnings report and how the consumer goods company is raising prices to combat inflation.

Video transcript

JULIE HYMAN: Also on earnings watch this morning is Mr. Brian Sozzi, and that's because we heard from Procter & Gamble, which raised its sales forecast after coming in with numbers that beat estimates. And Soz, the company is raising prices, right?

BRIAN SOZZI: Hey, Julia we, should have kept Brian Cheung here. We talked about inflation and how it's impacting P&G, and what the Fed might do. But look, we-- I talked to CEO Jon Moeller, the new CEO of P&G, officially took over on November 1, known inside the company as Mr. P&G. I talked to him ahead of the show on what he is seeing in terms of inflation, really after a pretty strong quarter for the company.

JON MOELLER: We've announced price increases in the majority, I think 9 out of 10 categories. Some of those price increases have not yet come to the shelf, they haven't yet come to market. So we're going to work through that before we take the next step.

BRIAN SOZZI: Do you see any signs we are nearing peak inflation, just from your standpoint in your business.

JON MOELLER: There are some commodities that are starting to modestly roll over, which is encouraging. There is capacity being added to some of the input supply chains, which is encouraging. On the other hand, in markets like labor and transportation, I don't expect any near-term decreases.

BRIAN SOZZI: Julie, what is interesting, too, just looking at P&G's results, sales rose faster than volumes in all the company's business segments despite really several rounds of price increases from P&G. But the company did warn that they will see $2.3 billion in commodity cost headwinds in its current fiscal year, this is the second fiscal quarter for P&G. That is up from a $2.1 billion estimate just three months ago when Procter Gamble reported.

So the inflationary environment remains pretty hot. P&G will likely push through some more price increases soon, but by and large, Moeller is telling us that he's not seeing consumers trend down to those private label products.

JULIE HYMAN: Very interesting stuff, and I know they're also coming out with some innovations in existing cleaning products, you were talking to us about that in the break. So we'll talk more about that a bit later, and we'll hear more of your interview with Jon Moeller of Procter & Gamble.

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