P&G dominance under threat from the compeition

By Simon Pitman

- Last updated on GMT

Related tags: Sales growth, Colgate-palmolive, Unilever

Procter & Gamble revealed yesterday that it is still on course
to achieve industry-leading fourth quarter sales growth of between
6 - 7 percent, as the company's organic growth strategy continues
to reap the benefits - but the competition is starting to get
intense as its rivals catch up.

After years of unprecedented growth, financial experts say that one of its biggest rivals in the personal care segment, Colgate-Palmolive, is looking particularly threatening. Indeed, sales growth at Colgate Palmolive in the most recent quarter exceeded that at P&G, a factor that financial experts believe has been strongly influenced by a significant increase in ad spend on the part of Colgate. Although P&G still remains by far the largest consumer goods company in the world, the fact that another player is starting to creep up does suggest that its domination of the market over recent years - further emphasized by its Gillette buy out in late 2005 - maybe under threat. Evidence of this has been further underlined by the performance of another arch rival, Unilever, which has seen increased sales growth in recent years after several years of disappointment, mainly in the face of tough competition from P&G. Unilever's recent financial results have been buoyed by strong sales of personal care products, particularly in the European market, with sales growth increasing significantly during the course of last year to top 3.8 per cent. But rest assured, P&G still looks like a mighty force. The company says that organic sales during the coming April - June quarter are expected to rise by 5 - 6 per cent, in line with its previous forecasts. Official results for the period due to be released on August 3. Organic sales are generally perceived to be a true marker of a company's current performance, because it discounts influences such as currency exchange rates, acquisitions and divestments. Financial analysts Thomson Financial expect sales growth for the quarter will come in at the upper end of the company's expectations, indicating that the it is continuing to grow at well above the industry average of around 2 - 3 per cent. For its third quarter, announced at the beginning of May, P&G said that net sales were up 8 per cent to $18.69bn, driven by double-digit growth in the baby & family care division and high single-digit sales growth in the beauty and blades and razors division. Likewise, profits for the period rose by 14 per cent compared to the same period last year to $2.51bn.

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