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By Jessica DiNapoli and Juveria Tabassum
(Reuters) -Pampers maker Procter & Gamble said on Thursday it would raise prices on some products to cover the impact on input costs from tariff war and lowered its annual forecasts, as consumers cut back spending due to economic uncertainty.
U.S. President Donald Trump's sweeping tariffs have roiled global markets and led to fears of a recession in the U.S., the biggest market for P&G, whose products include Tide detergent.
"We will have to pull every lever we have in our arsenal to mitigate the impact of tariffs within our cost structure and P&L," said CFO Andre Schulten on a call with reporters.
Pricing and cost cuts were the main levers, Schulten said, as changing raw material sourcing from China would be complex and difficult in the short term, mainly due to lack of options.
Shares of P&G fell 4.5% in early trading as the company also posted a bigger-than-expected fall in third-quarter revenue.
P&G imports raw ingredients, packaging materials and some finished products into the U.S. from China, while the vast majority - roughly 90% - of what it sells is produced domestically, a company spokesperson told Reuters.
China accounts for just over 10% of its imports exposure, but the 145% tariff makes the impact more substantial, Schulten said, pegging the annual hit to its cost of goods at around $1 billion to $1.5 billion. Its cost of products sold was $40.85 billion in 2024.
As sentiment takes a hit in the U.S. and global supply chains unravel, several companies have either cut or withdrawn their annual expectations.
P&G, a bellwether for consumer goods demand, saw U.S. shoppers slow their spending in February and March. North America accounted for 52% of its net sales in 2024.
It now expects total net sales for 2025 to be roughly in line with last year, compared with a prior target of 2% to 4% growth.
FLEXING ITS PRICING POWER
After raising prices significantly over the last few years, P&G executives had said they would rely less on the strategy to grow sales. The company raised prices by 1% in the third quarter, while volumes fell 1%.
P&G said it would sell new products are higher price points and raise it for some existing ones, while aiming to innovate across products such as its new Crest whitening toothpaste and Tide Evo detergent pods.
"It comes down to how much of these costs are companies willing to pass on so that they can maintain their earnings versus how much the consumer is going to push back and erode the top line," said Don Nesbitt, senior portfolio manager at F/m Investments, that holds shares in P&G.