Procter & Gamble profit beats expectations

Apr 26, 2016, 12:40 PM EDT
(Source: Mike Mozart/flickr)
(Source: Mike Mozart/flickr)

Procter & Gamble profit beats expectations despite lower sales.

Reuters reports:

Procter & Gamble Co (PG.N), the maker of Tide detergent and Gillette shaving products, reported a better-than-expected quarterly profit, boosted by cost-cutting and higher selling prices. However, P&G's sales declined for the seventh quarter in a row as higher prices weighed on volumes and as the company shrinks its vast product portfolio to focus on faster-growing brands such as Pampers diapers and Pantene shampoo. P&G's organic sales – sales excluding acquisitions, divestitures and currency impact – increased 1 percent in the third quarter ended March 31. But, analysts have warned that the Cincinnati-based company's reliance on price hikes, rather than volume growth, to boost organic sales would be unsustainable. P&G continues to expect organic sales to rise in the low-single digits percentage range in the fiscal year ending June, but sales would be driven by volume rather than pricing in the next two to four quarters, Chief Financial Officer Jon Moeller said on a media call.

The Wall Street Journal notes:

P&G logged a 5% volume decline in its beauty segment, a 6% drop in its grooming segment, a 3% decline in its health care segment, and a 2% slip in its baby, feminine and family care segment. The company said attributed its volume declines to lower shipments in developing markets, some brand divestitures and the so-called deconsolidation of its Venezuela operations—a move in which the company essentially wrote off its investment in the country even though it continues to do business there.

Bloomberg writes:

With the strong dollar hurting sales abroad and rivals chipping away at its market share domestically, P&G has focused on trimming expenses. Chief Executive Officer David Taylor, who took over in November, has called for an additional $10 billion in cost reductions in the next five years, building on his predecessor’s push to slim down the world’s largest consumer-products maker.