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P&G gets vote of confidence from investors

By Simon Pitman , 04-Sep-2006

Proof that P&G is on the right track following its merger with Gillette came during the course of August, after the company posted strong fourth quarter results that have led to a share price hike of more than 8 per cent.

In the first week of August the company announced that net sales grew 25 per cent during the quarter from April to June to reach $17.84bn, up 20 per cent on the fiscal year, thanks mainly to the weight of the added Gillette sales.

However, organic sales, which exclude the impact of divestures and all acquisitions, including Gillette, were up a very respectable 8 per cent.

But even more impressive was the jump in net profit, which was up 36 per cent for the quarter and 25 per cent for the fiscal year to reach $8.68bn.

The improved profitabilty, due mainly to increased synergies, have led to a steady stream of investment in the company's shares that grew more heated as August drew to a close.

Indeed the performance led financial analysts at UBS to reiterate their 'buy' rating for P&G shares this week, giving them a target price of $70 - 73.

Last month's strong showing on the financial markets meant that it has been one of the best performing major companies on international stock exchanges, managing to buck a general downward trend caused by rocketing oil prices.

But P&G has no intention of sitting on its laurels. As the company continues to look for new ways to boost sales, this week it announced an initiative that aims to boost its online activities and sales.

The company's agreement with RightNow Technologies is intended to focus on many of its personal care brands, including Olay, Pantene, Crest and CoverGirl.

RightNow will provide technology that will allow P&G to speed up response to consumer enquiries via a web self-service that will also provide email and chat forums. Likewise the technology allows the company to identify and tap into key consumer trends earlier.

The technology will be used to develop information on all its brands, including ways to optimize usage and problem-solving tips. This information will be managed and delivered across all P&G's online channels in multiple languages.

Currently P&G says that it is responding to more than 170,000 consumer enquiries a month relating to the company's leading brands.

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