Procter & Gambler has revealed that its net sales slipped 1% in the fourth and final quarter of the year, capping off a challenging year, with the company now set on a major brand portfolio shake up.
Net sales for the quarter ending in June came in at $20.16bn, compared to $20.30bn in the same quarter last year, results that show a steady deterioration in the company revenue performance for each quarter in the fiscal 2013/2014 year.
CEO A.G. Lafley said that organic sales growth for the quarter had been 2%, stressing that both currency translations and a number of minor divestitures has impacted the reported results.
Full year sales were up 1%, from $82.58bn, to $83.06bn, a figure that represented an increase of 3% in terms of organic sales, and what that also underlined the challenge the company has had to overcome with respect to currency translations throughout the year.
Lafley targets a brand overhaul
Speaking at a conference to announce the results, Lafley said that the company was now planning a major brand portfolio overhaul, which could see its brand portfolio reduced by half in a bid to make the business more efficient, P&G CEO pledges to cut brand portfolio by more than half.
“We met our objectives in a very difficult operating environment, delivered strong constant currency earnings growth, and built on our strong track record of cash returns to shareholders,” Lafley said.
Still, we have more work to do to deliver the profitable sales growth and strong cash productivity we are capable of delivering.”
Lafley then went on to discuss how the results had influenced the company’s going-forward strategy, helping form plans to further strengthen the results in the next financial year with a renewed focus.
Results by division
The results showed that the hardest hit of P&G’s five business divisions was beauty, where net sales were down by 5% $4.63bn for the quarter and down 3% in organic terms, reflecting a poorer performance from its salon professional and skin care businesses.
The best performance during the quarter came from its grooming business, where sales increased by 5% to reach $2.07bn, a figure that represented an organic growth of 7%, reflecting higher pricing and innovation on blades, razors and appliances.
During the quarter net sales were down 1% in health care, 2% in fabric and home care, and up 1% in baby and feminine care.
Outlook for 2015
Looking ahead to 2015 the company is forecasting organic sales growth in the low-to-mid single digit range, while net sales growth is predicted to be in the lower single digit range.
Likewise, the company also noted that the results are likely to continue to be influenced by foreign currency translations, with a special mention for the period July to September 2014, which is expected to have a significant negative result.