Proctor & Gamble Sales Gain Momentum, Pricing Remains Issue

On Tuesday, Proctor & Gamble posted quarterly results that beat the street on both top and bottom lines for its 2018 fiscal second quarter, showing a recovery after its organic sales had lost steam during the previous three-month period.

However, the company remains a victim of the difficult retail space of today, which helped to contribute to declines for both its Gillette shaving and diaper business.

P&G reconfirmed its forecast for sales for the full year, but increased its per share core earnings growth estimate for fiscal 2018 from a previous range of between 5% and 7% to a range of between 5% and 8%.

Earnings per share for P&G came in at $1.19 while analysts were expecting $1.14. Revenue for the consumer products giant reached $17.40 billion compared to an expected level of $17.39 billion.

CEO and chairman at P&G David Taylor said the company accelerated its growth in organic sales and delivered strong cost savings as well as cash flow.

The sales mark of $17.40 billion represented an increase of 3% over the same period one year ago, although gross margin fell 60 basis points.

With competition amidst retailers intensifying across the U.S., increased pressure has been put on makers of consumer products. P&G on Tuesday said it was continuing to cope with retailers not buying as much inventory and discounting products both of which has impacted sales.

Net sales in the grooming business, which Gillette is a part of, dropped by 3%. Within that segment, shave care fell at a pace of mid-single digit, but was an improvement when compared to the previous quarter, when its net sales in that business dropped by 5%.

Sales for the baby, family care and feminine business, which Pampers is a part of, fell 1%. That business has been pressured on a more broad scale as birth rates across the U.S. drop.

Competitor Kimberly-Clark, which sells diapers and paper towels to compete with P&G, announced on Tuesday it was cutting 13% of its global workforce in an attempt to lower costs as its sales continue to wane.

P&G’s strongest growth in sales was in beauty that experienced a jump of 9%, and in healthcare which was up 4%. In healthcare, its sales growth in oral care increased in the low single digits, while its personal healthcare was up by the high-single digits.

In part, the company said that an intense and early cold season helped to drive part of the sales in that segment.

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