In a conference call discussing the first quarter earnings, CFO Jon Moeller said that the beauty parts of the business are doing ‘fairly well’.
'In the Beauty, Hair and PC segment organic sales were unchanged, as pricing benefits from the prior year increases were offset by lower volume in Prestige.
The results show that the Ohio-based firm grew its antiperspirant and deodorant segment, while cosmetics organic sales were also up in the quarter with Max Factor growing shipments on a double-digit basis globally.
A good quarter was had on Hugo Boss which is P&G’s largest Prestige fragrance, and Hair Care also grew about 2% in the quarter, with the Pantene brand in the US standing out as volume was up 11% on the quarter.
Moeller explains that this progress in hair care is ‘encouraging’ but that it still needs to be cautious as the competitive intensity in the category is ‘significant.’
When it comes to US skin care, Moeller said: “Olay remains a work in progress. We are making some good progress in addressing some of the consumer benefit segments that we had neglected and that are important in the category with items like Olay Luminous and Olay Fresh Effects.”
“But we still have work to do both in North America and in China. But sequentially quarter-on-quarter [there are] better results in beauty from a top-line standpoint and we are hopeful we can continue that.”
P&G has been restructuring both its international operations and its brand portfolio to drive its profitability higher, and this will see Patrice Louvet become Group President Global Cosmetics, Prestige and Salon Professional, at the start of the new year.
As a whole, the company’s first quarter earnings fell below expectations as operating profit during the quarter declined 28.6% to $2.94 billion.
Despite the drop, the company has plans in place to divest parts of the business, as it will be spinning off its Duracell brand into a stand-alone company, as well as divesting Pet Care.
“P&G’s first quarter results were in-line with our expectations, despite a very difficult operating environment,” says CEO A.G. Lafley. “This keeps us on-track to deliver our fiscal year commitments.”
“We continue to accelerate and increase productivity savings, sharpen our strategies and strengthen our portfolio by focusing on our biggest opportunities. The pet care divestiture and exit of the battery business will allow us to further focus these efforts.”