P&G keeps going from strength to strength
defied market growth and the expectations of financial analysts,
with sales for the fourth quarter growing 8 percent and net profit
rising 19 percent - results that testify the fact
that Gillette continues to add plenty of value.
Sales were up from $17.84bn to $19.27bn on the back of strong sales for new Gillette razor launches and Crest oral care products, although every segment reported strong organic sales growth. The performance topped off a robust 12 months for the company, with an annual sales figure of $76.5bn, 12 percent up on last year's figure - helping to extend its position as the world's largest consumer goods company. Likwise profits were also well up as the company continues to benefit from increased synergies brought about by the merger with Gillette, which happened two years ago this fall. Net income for the quarter rose to $2.27bn from $1.9bn for the corresponding quarter last year, which the company said reflected synergies from the Gillette acquisition had kicked in faster than it had originally forecast. The results came in above expectations, with Thomson Financial polling average analyst forecasts' of $19.11bn for quarterly sales, but nonetheless shares dipped slightly on the first day of trading, closing 0.42cents down at $62.88 on Friday. Drawing attention to the fact that the results marked the sixth consecutive year where the company's growth has been at or above its targets, chief executive A.G. Lafley said "these results were achieved at the same time the organization was integrating Gillette, which is progressing ahead of plan. Our strong cash generation results and our confidence in the business outlook have enabled us to substantially increase our share repurchase commitment for the next three years". The share buy back scheme aims at driving investment in the company with the aim of further future expansion, which indicates a period of future acquisitions. Looking at the individual business segments within the business, the company said that sales for its beauty and health care division grew 8 per cent to $5.9bn, a figure that represented a four percent increase in volume. Of particular note was double-digit sales growth in the prestige fragrances category, driven by Dolce & Gabbana, Escada and Lacoste, but sales were also negatively impacted by 1 percent due to the suspension of SK-II sales in Asia following unfounded allegations over heavy metals in some formulations. Sales for the health care segment were up 11 percent to $2.2bn. This figure was driven mainly by oral care sales that grew in the high teens, supported by the continued strength of the Crest Pro-Health and Oral-B brands. Baby care and family care sales grew by 5 percent to $3.2bn, driven by growth from new Baby Stages wipes in North America and an upgrade of the Bounty brand. Meanwhile the household segment of the business reported sales up 10 percent to $4.8bn on the back of strong growth from Tide, Ariel Fabric and Gain and Downy brands. But leading the pack for growth was the Gillette division, which reported sales surging ahead by 18 per cent to $1.4bn on the back of strong growth for the Fusion razor brand and the launch of the female razor brand Venus Breeze. Looking to the fiscal year 2008, the company said it was expecting organic sales to continue their strong growth to reach approximately $81.1bn, representing 6 percent growth for the full year, with pricing and product mix expected to give a positive to neutral effect and the impact of acquisitions expected to have a neutral to negative effect.