P&G results top analysts' expectations
that its most recent quarterly results are continuing the trend and
is pointing to the proposed merger with Gillette as a means of
continuing the current momentum into the future, reports Simon
Pitman.
The company said that in its quarter ending June 30th sales were up 10 per cent to $14.28 billion, from $12.96 billion in the previous quarter. The increase in profits virtually matched the sales hike, with net earnings rising 9 per cent to $1.5 billion, from $1.37 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.
Looking more closely at the figures, organic sales, which do not include sales from acquisitions, divested businesses and foreign exchange rates, rose 9 per cent - a figure that many analysts believe is a true reflection of the company's current fortunes.
A.G. Lafley, who has been chairman of the company for the last five years and who is credited as being the driving force behind the huge growth the company has achieved under his helm, emphasized the fact that the results had come in despite competitive spending and economic weakness in both western Europe.
"Our balanced brand, customer and geographic presence and focus on consumer value and innovation leadership continue to drive sustained growth. Today, P&G is well positioned to deliver its growth targets, and the combination with Gillette will provide further upside over the mid- and long-term."
Analysts are predicting that in the immediate-term the merger will help to boost P&G earnings by 1 to 2 per cent. However, as the benefits of increased synergies are felt, this figure is expected to increase significantly in the longer-term.
Looking at the personal care and toiletries division, P&G Beauty - the company's biggest division - delivered a quarterly sales increase of 12 per cent to reach $4.93 billion, which included a 3 per cent gain from foreign currencies and meant that net profits grew by 27 per cent to reach $644 million.
In this category sales increases were led by strong double digit growth for both the Olay brand and the developing markets. In the hair care segment, Pantene, Head & Shoulders and Rejoice were also singled out for strong sales.
The baby and family care segment also reported a strong increase in sales, up 10 per cent to $3.01 billion, while sales in the health care division jumped 16 per cent to $1.90, mainly due to increases in dental care offerings and the developing markets.
Looking to the full year, P&G said it approved of analysts' predictions that sales would come in at between 6 and 8 per cent.
