Published : 3 years ago, on 30/07/2021

(Reuters) -Procter & Gamble Co forecast higher core earnings for the year, despite warning of a nearly $2 billion hit from higher commodity and transportation expenses, as the consumer goods giant banks on price increases and cost cuts to cushion the hit to its margins.

Shares of the maker of Gillette shaving products and Pampers diapers were up 1.3% at $141.35 in premarket trading, after the company reported fourth-quarter sales that beat estimates.

Consumer goods firms have been struggling with higher commodity and freight costs this year due to pandemic-related disruptions, forcing many, including Procter & Gamble, to raise prices.

P&G is experiencing significant input costs across most of its commodity basket, with pulp, resin and polypropylene being some of the top drivers, CFO Andre Schulten said.

The company expects a $100 million higher transportation bill this year, mainly in the United States, where a driver shortage is causing disruptions, Schulten added. Unilever and Reckitt Benckiser Group are some of the other big packaged goods companies to warn of soaring input costs.

Procter & Gamble said it expects a roughly $1.9 billion after-tax hit from higher input costs this year. Some of those costs would be offset by the strong sales the company is seeing across all its categories, according to Schulten.

“Everybody is experiencing these cost increases and I think we are well positioned,” outgoing Chief Executive Officer David Taylor said.

Taylor will be replaced by Chief Operating Officer Jon Moeller in November, the company said late on Thursday.

Procter & Gamble forecast fiscal 2022 core earnings per share to rise between 3% and 6%, or about $5.82 to $6.00, the mid-point of which was above the $5.90 that analysts were expecting, according to Refinitiv IBES data.

The company expects full-year net sales to rise 2% to 4%.

(Reporting by Uday Sampath and Siddharth Cavale in Bengaluru; Editing by Shounak Dasgupta)