Procter & Gamble profits rise but still struggles for higher growth

Procter & Gamble, the world’s largest household products maker, has reported a higher quarterly profit, helped by cost-cutting and stronger sales of items like detergent and air freshener. Net sales, however, in the third quarter were unchanged, at $20.6 billion, disappointing investors looking for faster growth several years into P&G’s efforts to focus on core products.

Organic sales, which exclude the impact of divestitures and acquisitions, rose 3 per cent, but a strong US dollar wiped out those gains. Shares fell 1 per cent to $79.85 in early trade; one analyst said P&G needed faster growth to lift shares.

P&G has been under pressure to launch innovative products and streamline its businesses. Two weeks ago, it said it was selling the bulk of its pet food business to Mars for $2.9 billion. In recent years, it also sold its Folgers coffee brand and Warner Chilcott pharmaceuticals.

Under a five-year, $10 billion restructuring plan announced in February 2012, P&G has sought to cut expenses by streamlining management, lowering overhead costs, cutting jobs and reducing marketing costs. Chief financial officer Jon Moeller told reporters the restructuring was running ahead of schedule.

Organic sales in P&G’s fabric care and home care division, which generates almost a third of sales, rose 6 per cent. Brands include Tide, Febreze air freshener and Duracell batteries.

Grooming, its most profitable business, saw sales rise 1 per cent. P&G’s struggling beauty division, which includes Head & Shoulders and Olay, improved, with sales up 2 per cent.

The company has been pushing hard for market share in emerging markets. The effort is paying off. Organic sales in emerging markets rose 5 per cent, compared to 1 per cent in developed markets, Mr Moeller said. P&G’s profit in those markets is lower given the money it is spending on marketing to establish itself. – (Reuters)