(Reuters) -Procter & Gamble reported a surprise drop in first-quarter sales on Friday, as consumers in its major markets, the United States and China, switched to cheaper household and personal care brands.
An uncertain U.S. economy has pushed customers mainly from the lower-income group to hunt for products at the cheapest price possible, hurting sales at P&G, as consumers move to rivals offering discounts, and cheaper private-label brands.
Additionally, a grim demand environment in China has resulted in P&G underperforming peers such as Nestle and Unilever.
P&G maintained its annual organic sales growth forecast of a 3% to 5% rise and core earnings per share expectation of $6.91 to $7.05.
Nestle on Thursday cut its annual sales forecast, noting the demand environment would continue to remain weak and flagged a drag on volumes from weaker economies such as Latin America.
Analysts also expect P&G to see a drag to its volumes from slowing demand in Latin America, China and the Middle East where people have called to boycott the company’s products because of its connections to Israel.
P&G reported a 1% increase in overall organic volumes in the first quarter, while the average prices across its product categories rose 1%.
The company’s first-quarter net sales fell 0.6% to $21.74 billion, compared with analysts’ estimates of a 0.2% rise to $21.91 billion, according to data compiled by LSEG. This is the company’s second straight fall in quarterly net sales.
Shares of the Dawn dish soap maker were marginally down in premarket trading.
P&G reported first-quarter adjusted profit per share of $1.93, above analysts’ average estimate of $1.90, driven by higher product prices.
(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Shinjini Ganguli)
