P&G results touch top-end of expectations

By Simon Pitman

- Last updated on GMT

Related tags Cent Procter & gamble Gillette

Proctor & Gamble has reported a 27 per cent increase in its
sales and a 33 per cent increase in net earnings as the company
continues to power away on the strength of last year's merger with
Gillette and a continued improvement in margins.

Net sales topped both analysts and the company's expectations, rising from $14.79bn in the first fiscal quarter of last year, to reach $18.79bn this year, indicating an organic growth of 6 per cent.

P&G executives had earlier in the month indicated that they expected sales to possibly go as high as $18.78bn, whereas 17 Wall Street analysts had polled average estimates of $18.56bn.

Net earnings increased to $2.70bn, on the back of the strong sales growth, the addition of Gillette and margin improvements. The company said that cost savings and the addition of the higher margin Gillette business had more than off-set acquisition-related expenses and higher commodity costs.

"The company delivered broad-based growth behind strong innovation on both the base business and Gillette. We are delivering our growth commitments and continue to make good progress with the Gillette integration,"​ said company president A.G. Lafley. "Looking forward, we expect earnings per share growth to accelerate driven by strong base business results, the ramp-up of Gillette synergies and an improving cost environment."

Breaking the sales down, the increase was attributed to a particularly strong performance from the Gillette business, which was underlined by a 12 per cent increase in blades and razors, due mainly to the launch of the five-bladed Fusion in Europe and Japan.

Likewise price increase across several product segments and the positive impact of a number of premium product initiatives helped to further drive sales.

But it was not just increased margins, sales volumes for the quarter also rose by 23 per cent, with cosmetic and toiletry brands such as Olay Definity, Crest Pro Health, Pantene Color Expressions, Head & Shoulders and Herbal Essences leading the way.

Looking at the individual performance of each sector, the company's beauty and health sales rose 11 per cent to reach $5.6bn, driven mainly by strong results on Gillette personal care products. However, weak points included the Max Factor cosmetic line in North America as well as professional hair care in Europe.

Healthcare sales grew by 32 per cent to reach $2.23bn, mainly driven by the addition of Gillette oral care, while baby care and family care increased five per cent to reach $3.10bn and net sales for blades and razors reached $1.30bn.

Looking to the full financial year ahead, the company says it is expecting organic sales to grow by four to six per cent, while acquisitions and divestures are expected to add about four per cent to sales growth, leading to a total sales increase in the region of 9 to 11 per cent.

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