Procter & Gamble beats target, despite financial turmoil

Procter & Gamble says that net sales for the first quarter grew by 9 percent to $22.0bn, while sales volume grew by just two percent – reflecting the 3 percent impact the increased retail prices had on the results.

Company CEO A.G. Lafley said that the results had been driven by a ‘balanced brand and geographic portfolio’, adding to his belief that ‘P&G will deliver target growth over the long term, even in a challenging economic environment’.

Beauty leads the way​

The company said that its beauty division had led the way, backed up in part by both the baby care and family care segments, while specific brands such as Gillette, Head & Shoulders, Cover Girl and SK-II had all registered double-digit sales growth.

Overall net earnings increased by 9 percent to $3.3bn for the quarter, which the company said was driven by the strong sales growth, combined with high non-operating gains from divestitures that were already planned.

Breaking the sales figures down by business segment, beauty net sales increased by 12 percent to $5.1bn, thanks to a 4 percent increase in volume and a 2 percent positive impact from price increases.

Beauty profits leap, too​

This meant that net profits for the beauty division grew by 9 percent to reach $754m.

The sales figures were led by volume gains in all brands from the hair care segment, pushing sales up by mid-single digit figures, whereas skin care sales volumes grew by low single digit figures.

The results were impacted by poorer results in the professional hair care segment, where sales volume growth was in the low single-digit figures, and prestige fragrances, where sales volumes declined by low single-digit figures

Gillette drives grooming​

In the grooming division, which incorporates Gillette, net sales were up 6 percent to $2.1bn, where as net profits also increased by 6 percent to $478m, driven by low single-digit growth from both the Venus and Fusion blades and razors

Looking ahead, the company says it is still on course to achieve organic sales growth of between 4 – 6 percent for the full year, whereas the impact of product mix and pricing is expected to positively impact sales by 2 – 3 percent

During the second quarter, October – December, organic sales are expected to also grow by 4 – 6 percent, whereas sales growth is expected to grow by around 4 percent.

However, two points to watch out for during this period will be the negative impact of currency exchange, which is expected to impact results by approximately 3 percent, and the impact of acquisitions and divestitures, which is also expected to negatively impact results by around 2 percent

This means that the effects of currency exchange and acquisitions and divestitures are expected to impact the second quarter sales results negatively, by approximately 1 – 2 percent.