Gillette has reported a significant rise in both quarterly sales in profits boosted by a series of new product launches. The results leave it in good shape for the proposed merger with P&G later this year, reports Simon Pitman.
Net sales rose 13 per cent to reach $2.77 billion, a figure that was well up on analysts' expectations. Meanwhile net profits rose even higher, up 17 per cent to $498 million.
The company attributed the performance to strong consumer demand for new products, including its new range of vibrating razors, the continued strength of established brands, a good mix of profitable premium brands and on-going savings from manufacturing cost reductions.
"We have achieved tremendous gains in manufacturing productivity and overhead savings, which have provided the resources for broad-based innovation," said James Kilt, Gillette chairman. "We also have growing strength in all key categories, reflecting our powerful marketing programs and great execution behind new products."
The maker of razors and blades, Duracell batteries, electric razors and oral care products said that all of its business divisions had reported double digit sales growth, except personal care.
In particular sales in its oral care division rose 17 per cent to reach $420 million, while sales of blades and razors rose 11 per cent to reach $1.21 billion. Personal care sales grew by 9 per cent to reach $256 million.
The company said that even stronger results were hampered by currency-related increases in European manufacturing costs and higher marketing investment.
The results come in the same week as P&G announced equally strong quarterly financial results, putting both companies in a good position for their proposed $57 million merger, which is expected to be finalized this fall.
P&G reported sales up 10 per cent to $14.28 billion for the quarter and net earnings up 9 per cent to $1.5 billion. The sales figure reflected gains from strenghtened leading currencies, such as the euro, Canadian dollar and British pound - beating analysts' expectations which were nearer the $14 billion mark.
In order to secure the proposed deal, P&G has said that it will swap 0.975 shares of its stock for every Gillette share, giving Gillette a price tag of around $53.5 billion.