Procter & Gamble posts healthy profits and growth

By Simon Pitman

- Last updated on GMT

P&G is continuing its unbroken run of significant profit and
organic growth, as the company's personal care and beauty sales
continue to provide significant opportunities for what is now the
world's largest consumer goods company.

Net sales grew 25 per cent during the quarter from April to June to reach $17.84bn, up 20 per cent on the fiscal year, while organic sales, which exclude the impact of divestures and acquisition, were up 8 per cent.

The company said that the rise in its organic sale was well ahead of predictions, which following the acquisition of Gillette in the last quarter of 2004, were estimated to range at 4 - 6 per cent for the current financial year.

But even more impressive was the jump in net profit, which was up 36 per cent for the quarter and 25 per cent for the fiscal year to reach $8.68bn.

The company said that this figure was achieved off the back of strong organic sales growth, as well as significant margin improvements and the acquisition of Gillette.

"This marks the fifth consecutive year in which P&G has delivered topline growth at or above the company's targets,"​ said Chairman of the Board, President and Chief Executive A.G. Lafley.

"Demand for P&G's brands is strong. We're continuing to drive P&G's business with breakthrough innovations and excellent in-market execution. This, combined with the great progress on integrating Gillette, positions P&G to deliver its growth objectives in fiscal year 2007 and beyond."

Market analysts noted that P&G's organic sales growth was significantly above that of competitor Unilever, which has recently revealed organic sales growth of 3.4 per cent for the last six months, compared to 6 per cent for P&G.

The results suggest that P&G's Gillette acquisition has proved to be a big winner for the company, leaving its Anglo-Dutch competitor in the shadows.

And again it has proved to be the personal care arena where P&G's operations are really shining. The company's beauty care division reported seven per cent organic growth to reach €5.44bn, thanks mainly to the addition of Gillette, as well as increases in hair care and skin care.

However, the company did point out that on a regional basis sales growth was only 1 per cent in North America, due to lower promotional spending and higher pricing for feminine care products.

Hair care particularly benefited from strong Pantene, Head and Shoulders, Rejoice and Herbal Essences sales, while skin care was helped along by growth in the Olay Regenerist and Total Effects brands.

In the health care unit organic sales were up 7 per cent to reach $1.97bn, mainly due to the addition of the Gillette oral care business. In particular the worldwide market share for the Oral-B toothbrush range increased by 1 per cent.

Net sales increased 9 per cent for the Household care unit to reach €4.35bn, while sales for Baby Care and Family care were up four per cent to reach $3.08bn and sales for the company's snack division increased 2 per cent to reach $1.11bn.

On the back of the results the company said that in 2007 it is expecting its fifth consecutive year of ten per cent growth in earnings per share, while organic sales are expected to remain at 4 - 6 per cent, while total sales are forecast to grow at 9 per cent, boosted by positive currency exchange rates.

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