(FILES) This file photo taken on July 15, 2008 shows Procter & Gamble Co. (P&G) corporate headquarters in Cincinnati, Ohio. Strong sales of electric toothbrushes helped Procter & Gamble to better-than-expected earnings in the latest quarter. The consumer products giant, which suffered revenue declines in all four quarters of the last fiscal year due to a strengthening dollar and lackluster global economic growth, October 25, 2016 reported flat sales of $16.5 billion in the first quarter of fiscal 2017. / AFP PHOTO / GETTY IMAGES NORTH AMERICA / SCOTT OLSON
BENGALURU: Procter & Gamble Co (P&G), the maker of Tide detergent and Pampers diapers, reported a better-than-expected quarterly profit, helped by cost-cutting and strong demand for its baby, feminine and home care products.
P&G’s shares were up 4.6% at US$87.97 on Tuesday morning.
The company has been selling off unprofitable brands and focusing on core brands such as Tide, Pampers and Gillette to revive sluggish sales. P&G sold 41 of its brands, including Clairol and Wella, to Coty Inc in a US$12.5bil deal earlier this month.
P&G is also planning to save as much as US$10bil in costs over the next five years, after cutting the same amount in costs over the last five years.
The company plans to reinvest a significant portion of savings from the new plan in product and packaging improvement, research and development, and expanding sales coverage, P&G’s chief financial officer Jon Moeller said on a media call.
Organic sales in P&G’s fabric and home care business - its largest - rose 4 percent in the first quarter, while those in baby, feminine and family care, the second largest, rose 2%.
The two businesses, which house brands such as Tide, Febreze, Pampers and Tampex, together accounted for 60% of the company’s total revenue.
P&G’s revenue was driven by “solid” volume growth of 3% in the quarter, in contrast to rivals such as Unilever, whose sales were mainly propped up by price hikes, Jefferies analyst Kevin Grundy wrote in a note.
Net sales remained largely flat at US$16.52bil in the quarter ended Sept 30, but beat the average estimate of US$16.49bil, according to Thomson Reuters I/B/E/S.
Sales in the United Kingdom, P&G’s largest European market, fell 2% in the quarter, Moeller said.
Britain’s vote to leave the European Union has caused a plunge in the pound, leading consumer goods makers such as Unilever to attempt to raise prices in the market.
Moeller declined to discuss P&G’s pricing strategy, but said the UK continued to be a “very challenging and highly promotional” market.
P&G said net income attributable to the company rose 4.3% to US$2.71bil, or 96 cents per share.
Excluding items, P&G earned US$1.03 per share from continuing operations, beating the average analyst estimate of 98 cents.
P&G’s quarterly sales have been mostly falling for more than three years, as the company has been cutting its brand portfolio. - Reuters
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