Price-cuts bring consumers back to the P&G fold

By Simon Pitman

- Last updated on GMT

Related tags Percent Revenue Procter & gamble

Procter & Gamble has delivered net sales growth of 6 percent for its second quarter, with strong unit volume sales growth indicating its brands are back on track.

The results showed that sales grew to $21.0bn, indicating a 5 percent increase in both unit volume and organic growth – a result that was ahead of company forecasts.

Boost in sales

P&G said that increased advertising and marketing, initiative activity and market growth in specific business had boosted the sales. The company also said that discounting had helped to bring in consumers, although prices went up by 1 percent overall.

Likewise, favorable foreign currency results also helped to boost net sales by a further 2 percent, as key global currencies began to strengthen against the US dollar.

Net earnings slid by 7 percent, from $5.00bn to $4.65bn, but the comparison was distorted by the sale of the company’s Folger’s coffee brand during the corresponding quarter in 2008.

Company CFO Jon Moeller stressed that the volume sales growth was ‘very encouraging’ while also stating that the organic growth was at the top end of its forecasts.

For the first six months of the year the company’s sales were level, up fractionally from $40.74bn to $40.83bn, while net earnings fell by 5 percent to $7.96bn.

Strong performance in Asia

During the second quarter net beauty sales increased by 7 percent to €5.2bn, which represented a 2 percent increase in volume, a figure that was significantly boosted by mid-single digit increases in hair care, driven by the performance in Asia.

Grooming sales grew by 3 percent to $2.1bn, reversing big losses recorded earlier in the year, but still representing a 2 percent dip in unit volume. The company said gains mainly came from favorable currency exchange and price increases in developing countries.

Given the performance, the company said it would stick to its estimates for 3 – 6 percent sales growth in fiscal 2010, while it is increasing its expectations for organic sales, raising its original prediction of 2 - 4 percent to 3 – 5 percent.

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