Gillette merger spells boost for P&G

By Simon Pitman

- Last updated on GMT

Related tags Cent Revenue

The first full quarter financial results following the merger with
Gillette spell a big success for P&G. Results were well ahead
of expectations after the world's largest consumer goods company
more than tripled revenue growth, the fastest rate in more than ten
years.

P&G finalised the $57 billion (€47.16bn) to merge with Gillette in the fall of last year and has not looked back. The company said that its unit volume grew 27 per cent, while net sales also grew by 27 per cent to reach $18.34 billion, supported by strong increases in the figures for both the Gillette and P&G divisions.

Likewise, net earnings increased 29 per cent to reach £2.55 billion, which the company said was driven largely by the addition of Gillette.

The news was well received by the financial world, forcing shares to edge up 0.92 cents to $59.74 when New York trading finished on Friday. The news also encouraged the company to raise its outlook.

"Excellent topline growth enabled us to exceed earnings expectations in what we anticipate to be the most difficult cost quarter of the fiscal year. This quarter's results, a robust innovation pipeline, and good progress on the Gillette integration, give us the confidence to raise the earnings outlook for the fiscal year."

With regards the integration program, the company said it had made good progress on both the revenue and cost synergies and remains on track with its three year revenue and cost synergies plan.

Breaking the quarterly figures down, the company reported that beauty volume sales for P&G increased by 9 per cent, which included the addition of the Gillette personal care operations. Net sales increased by 7 per cent to reach $5.37 billion, while net income also increased 7 per cent to reach $848 million.

The company noted that skin care delivered double digit growth, driven particularly by the Olay Regernarist line and Total Effects Cleansing.

Net sales for family health, which also includes oral care, grew by 29 per cent to reach $2.64 billion, while profits leaped 41 per cent to reach $427 million.

Net sales for the baby care and family care divisions increased 2 per cent to reach $3.04 billion, while net earnings grew by 5 per cent to reach $330 million.

The company said that for the financial year of 2006 it was expecting its fifth consecutive year of business growth, at or above targets. This year it is also expecting organic sales to jump 6 - 7 per cent.

Foreign exchange is predicted to impact sales by 2 per cent, but that will be counterbalanced by a 14 - 15 per cent growth in sales after divestures and acquisitions.

Net sales are expected to increase by up to 20 per cent against the $56.74 billion figure last year.

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