Procter & Gamble earnings beat, but company warns cost pressure will weigh on future profits

View of Dawn dish soap liquid at Stop & Shop Supermarket.

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Procter & Gamble on Friday topped analysts' estimates for quarterly earnings and revenue as consumers bought more premium health care and personal care products.

But the company warned that increasing commodity costs could hit its earnings in the upcoming year. It follows rival Unilver signaling a similar warning last week that it was facing higher costs for packaging, ingredients and transportation.

P&G shares jumped around 1% in early trading on the news.

Here's what P&G reported for the quarter ended June 30 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: $1.13 vs. $1.08 expected
  • Revenue: $18.95 billion vs. $18.41 billion expected

P&G reported net income for the period ended June 30 of $2.9 billion, or $1.13 per share, compared with $2.8 billion, or $1.07 per share, a year earlier. Analysts surveyed by Refinitiv were expecting earnings per share of $1.08.

Net sales rose 7% to $18.9 billion from $17.7 billion a year earlier. That beat Wall Street expectations for $18.41 billion. Organic sales climbed 4%.

P&G reported the strongest growth in its beauty and health care businesses, as consumers prepare to head back to the office and social gatherings.

The health-care business saw organic sales climb by 14%. Much of that growth came from the segment's oral care products, which include Oral B toothbrushes.

P&G's beauty segment reported organic revenue growth of 6%. The company saw continued demand for its premium SK-II brand. But it said some of the gains were offset from lower selling volumes in North America, due to inventory stocking issues.

The company's fabric and home care segment, which includes Dawn and Cascade dish detergents, reported organic sales growth of 2%. Growth has been slowing in this segment as consumers buy fewer cleaning supplies for their homes.

The company's grooming segment, which includes Gillette and Venus, saw organic sales growth of 6%. 

Baby, feminine and family care was the only segment with declining organic sales, reporting a 1% drop from a year earlier.

For fiscal 2022, P&G is calling for fiscal year sales to grow 2% to 4% from the prior year. Organic sales are forecast to rise in the same range.

It's calling for core earnings-per-share growth of 3% to 6% compared with the previous fiscal year's $5.66.

P&G said its current outlook estimates taking a roughly $1.9 billion after-tax hit from higher commodity costs and freight costs.

Analysts surveyed by Refinitiv had been looking for adjusted earnings per share of $5.90 in fiscal 2022 on sales of $78.17 billion.

P&G announced Thursday evening that current chief operating officer Jon Moeller will become CEO in November, replacing David Taylor, who will become executive chairman of the company's board of directors. Taylor, 62, had been CEO since Nov. 1, 2015.

The company — whose portfolio includes Tide detergent, Charmin toilet paper and Pampers diapers — is on track to raise prices on some products this autumn in response to higher commodity costs. Rival Kimberly-Clark, which makes Huggies, has also announced price hikes on various items.

After the price increases go into effect, P&G is planning to hold market share by trying to increase consumers' perception of the value of its products and introducing new or upgraded items. Companies such as P&G and Kimberly-Clark are betting consumers will be willing to pay more for the brand version, instead of opting for a cheaper private label.

P&G shares are up less than 1% year to date. The company has a market cap of $341.4 billion.

—CNBC's Amelia Lucas contributed to this reporting.