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P&G delivers mixed results for its second quarter

By Simon Pitman+

27-Jan-2014

Procter & Gamble reported mixed results for its second quarter with net sales remaining unchanged, a result boosted by emerging markets, but negatively impacted by foreign currency and slow beauty sales in developed markets.

The group net sales were $22.3bn, which was level with last year’s result. This was because, although organic sales grew at 3%, foreign currency also negatively impacted the results by 3%.

Net income fell 16% to $3.43bn, compared to $4.06bn in the corresponding period last year.

On track to deliver full-year forecast

“We’re on-track to deliver our objectives of 3-4% organic sales growth and 5-7% core EPS growth for the fiscal year,” said chairman, president and CEO A.G. Lafley.

“We expect strong earnings growth in the second half of the fiscal year driven by solid top-line growth, moderating headwinds from foreign exchange, and productivity savings that build throughout the year.”

Although the results were not dynamic, they did top expectations, as the company continues to make investments and acquisitions in emerging growth markets, which is helping to prop up parts of the business that are not performing so well.

Emerging markets help to balance poorer results elsewhere

The company’s CFO, Jon Moeller, said in a press conference that sales for the emerging markets had risen by 8% during the quarter, a result that outpaced the developed markets, where results were largely unchanged.

Mainstay beauty sales remained unchanged at $5.28bn, with gains coming from market growth and innovation in prestige, hair care, personal cleansing and deodorants, being offset problems with both geographic mix and volumes, as well as a dip in skin care.

Baby, feminine and family care segment organic sales increased 3% to $5.60bn, which was driven by product innovation and baby care market growth in the developing regions.

Grooming, baby, feminine and family care, prop up beauty

In grooming, organic sales increased by 3% to $2.11bn, a figure that was driven by innovation and higher pricing for razors and blades, although this was countered by a drop in sales in developed regions, as well as geographic and product mix.

For the full six months, net sales were up 1% to $43.48bn, whereas net profits down 6% to $6.53bn.

Looking ahead, the company says it continues to expect organic sales in the 2014 fiscal year to grow by approximately 3% to 4%, while overall net sales are expected to grow at approximately 1% to 2%, which includes the projected negative impact of foreign currencies.

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