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- Procter & Gamble CEO Jon Moeller said Wednesday that the consumer product maker's better-than-expected quarterly results came about because of strong demand and pricing power.
- "Demand has continued to be strong," the head of Procter & Gamble (NYSE:PG) told CNBC.
- Moeller's comments followed the release of P&G's (PG) latest quarterly results, which showed a non-GAAP EPS figure that topped expectations by a penny. Revenue rose 6% to $20.95B -- beating expectations by over $600M.
- The company also raised its organic sales growth figures, saying it now expects an increase of 4%-5% for the full year. Previously, the firm had projected growth in the 2% to 4% range.
- In discussing the upbeat sales projection, Moeller highlighted the fact that half of its increase in organic sales came from higher prices, while the other half was driven by increased unit volume, a signal of strong demand.
- He also noted that the firm's ability to raise prices didn't just reflect the current inflationary environment. Rather, the firm had extra pricing power from its commitment to innovation.
- "When you have a business model that's founded on innovation, that provides higher levels of delight, that solves problems better for consumers, you're able to charge a little bit more," he said.
- Moeller added that he continues to see "very positive" signs on the pricing front, with the market showing 20%-30% less price elasticity than he had previously thought.
- That said, the P&G CEO warned that higher costs would also present a challenge in the current environment. He estimated a total headwind of $2.6B related to increased commodity and transportation costs.
- Bolstered by the earnings news, PG rose about 3% in Wednesday's early intraday action. The stock rose by $4.89 to $161.62 at about 9:45 a.m. ET.
- PG rallied to a 52-week high of $165.32 at the end of December but has drifted off that peak in the past couple of weeks. The stock has risen about 16% in the past year, compared to a 23% rise in the S&P 500, as you can see in this chart.