Strong Dollar Winds Blow P&G’s Fiscal Forecast Off Course

Last updated: November 19, 2023

Procter & Gamble (P&G) is feeling the pinch of a robust dollar, a common issue for multinationals.

Strong Dollar Winds Blow P&G's Fiscal Forecast Off Course
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The consumer giant is grappling with a currency headwind of about $1 billion after tax, a $600 million increase to its full-year guidance since late July.

The dollar’s strength, fueled by a surge in Treasury yields and the Federal Reserve’s higher-for-longer interest rate approach, is expected to persist for the next few months.

Despite this, P&G is holding firm to its fiscal 2024 guidance for per-share earnings growth of 6% to 9%, translating to a range of $6.25 to $6.43.

However, the business has adjusted its sales growth forecast from 3% to 4% in July to a range of 2% to 4%.

“We expect the environment around us to continue to be volatile and challenging from input costs to currencies to consumer and geopolitical dynamics,” said CFO Andre Schulten.

The strong dollar’s impact is felt by global companies like P&G as it diminishes the amount they receive when repatriating cash from weaker currency countries.

On a brighter note, P&G anticipates commodities to create a tailwind of about $800 million after-tax in fiscal 2024, consistent with earlier guidance.

However, the company now expects relief from commodities like pulp but faces challenges from higher fuel costs. “In addition to these impacts, we are also facing higher inflation and wages and benefits, and we expect higher year-on-year net interest expense of approximately $200 million after tax,” added Schulte.

Despite the headwinds, P&G’s stock rose 2% after its earnings surpassed consensus estimates.

Also Read: Costco’s Stock Soars Amid Market Turbulence

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