P&G returns to organic sales growth

Listen to this article


David Taylor’s tenure as Procter & Gamble’s new chief executive is off to an encouraging start after US consumer goods heavyweight posted a return to organic sales growth, a measure that strips out currency swings, during the final quarter of 2015.

The maker of Tide washing detergent and Gillette razor blades said organic sales – a metric watched in the industry – rose 2 per cent in the quarter to end of December. The rise – which was ahead of analysts’ expectation for a 1 per cent gain – comes after P&G shocked investors when last quarter it reported its first decline in organic sales since the US recession of 2008-2009.

Nonetheless, the gain in organic sales wasn’t enough to offset the impact of the strong dollar. Net sales dropped 9 per cent during the period to $16.9bn, in line with market forecast. Net income was up more than a third to $3.2bn, or $1.12 per diluted share.

Mr Taylor said:

We are encouraged by our return to organic sales growth in the quarter. With the top-line improvement and continued cost reduction, we delivered solid core operating income and EPS growth in the face of significant macro-economic and geopolitical headwinds.

Faced with slowing growth in many of its key brands, P&G has been pulling out of unprofitable businesses and pushing through improvements in productivity. In July it announced a deal to spin-off Clairol and 42 other beauty brands to Coty through a complex $12.5bn-plus deal.

Although the continued strength of the dollar and weaknesses in emerging market currencies has prompted P&G to raise its forecast on the impact of currency headwinds to 7 percentage points from 5-6 percentage points, the company is keeping its full year sales and earnings guidance intact.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.