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P&G sees profits jump on the back of restructuring and sales gains

By Simon Pitman , 28-Jan-2013

Procter & Gamble has seen a big rise in its profits for the latest quarter, as savings from the company’s restructuring plan start to take effect alongside modest sales growth.

The company said that net sales grew by two percent to reach $22.2 billion, a figure that was positively impacted by one percent due to foreign currency translations that were largely attributable by the US dollar gaining against foreign currencies, to give organic sales growth of three percent.

The company added that all business segments increased by two percent or more compared to the previous year.

Strong global performance in October

The performance in the month of October was particularly strong on a global basis, when it grew market share in business by 50 percent of sales, whereas the month of December was particularly strong in the US market, where it held or grew value share in businesses at nearly 60 percent.

“Our second quarter results were at the high end of our expectations on the top-line and well ahead of forecast on operating profit, earnings per share and cash flow,” said Chairman, President, and Chief Executive Officer, Bob McDonald.

Investment analysts concurred with the results, which were almost universally above market expectations, in turn giving a significant boost to share prices.

Market share is increasing worldwide

“Global market share trends improved as we continued to implement our growth strategy and made very good progress against our productivity and cost savings goals. Our strong first half results have enabled us to raise our sales, earnings and share repurchase outlook for the fiscal year, while we strengthen investments in our innovation and marketing programs.” McDonald added.

Looking at the business segments, beauty sales showed one of the lowest growth rates, with the net figure up 1 percent and the organic sales figure up 3 percent, which compared favorably to the previous year when the figures were negative.

Net sales took a hit in the grooming segment, falling by - 4 percent, which the company said was attributable to the divestiture of the household appliances business and negative foreign exchange.

Baby care had the biggest increase of any of the five business segments, with net sales up 4 per cent for the quarter and organic sales up 5 percent, figures that were largely attributable to innovations for the Charmin and Bounty brands.

Looking ahead to the fiscal year 2013, the company said that, given the strong latest quarter results, it is raising its estimate for organic sales growth to three percent to four percent, compared to a previous forecast of two percent to four percent, leading to a net sales guidance of one percent to two percent.

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