Procter & Gamble lowers annual forecasts as trade war hits consumer demand

Procter & Gamble on Thursday lowered its annual sales and profit forecasts after reporting a bigger-than-expected drop in third-quarter net sales as consumers slashed spending due to economic uncertainty amid an ongoing trade war.

P&G’s shares fell 3% in premarket trading.

U.S. President Donald Trump’s sweeping tariffs on imports have left global markets reeling and given rise to fears of a recession in the United States, the biggest market for consumer goods maker P&G, whose products include Tide detergent. As sentiment takes a hit and global supply chains unravel, several companies have lowered their expectations for the year as consumers see their budgets being stretched.

A P&G spokesperson said the company saw U.S. shoppers slow their spending in February and March in particular. The firm, a bellwether for consumer goods, now expects total net sales for fiscal 2025 to be roughly in line with the prior fiscal year, compared with its earlier target of 2% to 4% growth.

Those expectations include some assumptions about the impact of tariffs, the spokesperson said, adding that the company still does not know the full extent of how they will affect its costs.

P&G imports raw ingredients, packaging materials and some finished products to the United States from China, while goods it makes in the United States and exports to Canada could also be hit by tariffs, the spokesperson said.

But the vast majority - roughly 90% - of what P&G sells in the United States is produced domestically, the spokesperson added.

P&G previously said it may have to hike prices to offset tariffs.

Sellers of consumer staples like toilet paper and dish soap are typically considered safe havens during turbulent economic times, under the assumption that consumers will continue to buy necessities. But 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.

P&G competitor Reckitt saw sales volumes decline in Europe and North America on Wednesday. Kleenex tissue makerKimberly-Clark also cut its annual profit forecast earlier this week and said it would incur about $300 million in costs this year due to the trade tariffs.

In contrast fellow consumer goods bigwigs Nestle and Unilever topped market expectations for quarterly sales, helped by higher prices for the former’s packaged foods business and Unilever’s top brands such as Dove soap and Vaseline.

After hiking prices significantly over the last several years, P&G executives have said they will rely less on that strategy to grow sales. The company raised prices by 1% this quarter, and volumes fell 1%.

The company 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.

P&G’s third-quarter net sales fell 2% to $19.78 billion, compared with analysts’ average estimate of a 0.44% fall to $20.11 billion, according to data compiled by LSEG.

The company has faced weak demand through this fiscal year in China due to a choppy macroeconomic background. This has hurt overall volume growth, even as P&G invests in introducing new products and different price tiers in markets such as the United States and Latin America.