Finance
P&G looks to raise prices as tariffs hit costs and force forecast cuts
Published by Global Banking & Finance Review®
Posted on April 24, 2025
4 min readLast updated: January 24, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on April 24, 2025
4 min readLast updated: January 24, 2026
P&G will raise prices to counteract tariff impacts, affecting consumer spending and sales forecasts. The company faces challenges from private label brands.
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 the trade 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 were down nearly 5% in early afternoon 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 import 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As sentiment takes a hit in the U.S. and global supply chains unravel, several companies have either cut or withdrawn their annual expectations.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 at higher price points and look to raise prices 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, which holds shares in P&G.
P&G, whose products command a premium on the shelves of retailers like Walmart and Target, faces a growing threat from the stores' private label brands.
Schulten said it was too early to speculate on how much pricing the world's biggest maker of household staples would take, and that it is now planning for its next fiscal year which begins in July. P&G would make the pricing decisions with its retail partners - like Walmart, Target and Amazon - in mind.
Rival Reckitt on Wednesday posted a decline in sales volumes in Europe and North America, while Kleenex tissue maker Kimberly-Clark cut its annual profit forecast earlier this week.
In contrast, fellow consumer goods bigwigs Nestle and Unilever topped quarterly sales expectations on higher prices for the former's packaged foods business and Unilever's top brands such as Dove soap and Vaseline.
P&G expects annual core earnings per share in the range of $6.72 to $6.82, down from its prior target of $6.91 to $7.05.
Its third-quarter net sales fell 2% to $19.78 billion, compared with expectation of a 0.44% drop, according to data compiled by LSEG, while adjusted earnings per share of $1.54 beat estimates by 1 cent.
(Reporting by Juveria Tabassum in Bengaluru and Jessica DiNapoli in New York; Editing by Arun Koyyur, Nia Williams and Matthew Lewis)
The article discusses P&G's plan to raise prices due to increased costs from U.S. tariffs and its impact on sales forecasts.
Tariffs have increased P&G's input costs, leading to price hikes and adjustments in sales forecasts.
P&G plans to raise prices, innovate products, and collaborate with retail partners to manage increased costs.
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