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P&G Reports Net Sales Increase for Q4, Fiscal 2011
Posted: August 8, 2011
The Procter & Gamble Company’s net sales grew 10% to $20.9 billion for the fourth quarter and 5% to $82.6 billion for fiscal 2011. Organic sales, which exclude the impact of acquisitions, divestitures and foreign exchange, grew 5% for the quarter and 4% for the fiscal year. Unit volume was up 3% in the fourth quarter and 6% for the fiscal year, where volume grew in all business segments, all geographic regions, and in 15 of 17 key countries.
"We are pleased with the strong top- and bottom-line performance in the quarter," said chairman, president and CEO Bob McDonald. "We delivered organic sales growth of 5% and earnings per share growth of 18% in a challenging environment, driven by our ongoing commitment to make a difference in the everyday lives of the world's consumers."
For the April–June quarter, beauty net sales increased 7% to $5.1 billion, on 1% volume growth. Organic volume, which excludes the net impact of Zest, Infasil and minor fragrance divestitures, increased 2% and organic sales grew 3%. Favorable foreign exchange improved net sales by 6% and higher pricing improved net sales by 2%. Geographic and product mix reduced net sales by 2% due to disproportionate growth in developing regions. Volume growth was driven by high single-digit growth in developing regions, while volume in developed regions was down mid-single digits. Volume in retail hair care grew low single digits behind initiative activity and distribution expansions in Asia, Latin Americ, and Western Europe, partially offset by a double-digit decline in North America due to the Pantene restage in the base period. Volume in female beauty grew low single digits as Olay skin care distribution expansion in Asia and CEEMEA was partially offset by a low single-digit decline in developed markets driven by the Zest and Infasil divestitures, competitive activity in North America cosmetics, and decreased shipments in North America Skin due to the Olay UV line reformulation. Volume in salon professional declined low single digits due to market contraction and competitive activity. Volume in prestige products was down mid-single digits due to minor brand divestitures. Net earnings decreased 17% to $414 million, as lower operating margin more than offset the impact of sales growth. Operating margin declined behind increased marketing investments and higher commodity costs, partially offset by a reduction in overhead spending as a percentage of sales and manufacturing cost savings.
Also, grooming net sales increased 7% to $2.1 billion on a 1% increase in volume. Organic sales increased 1%. Favorable foreign exchange increased net sales growth by 6%. Price increases added 2% to net sales growth behind blades and razors price increases across all regions and inflationary pricing in Latin America. Unfavorable geographic mix reduced sales growth by 2%. Volume growth was driven by mid-single-digit growth in developing regions, which was partially offset by a mid-single-digit decline in developed regions. Volume in male grooming increased low single digits primarily due to growth of blades and razors in developing regions, particularly Latin America and Asia, partially offset by a decline in developed markets due to the base period impacts of the U.S. Fusion ProGlide launch. Volume in appliances decreased mid-single digits due to a shift in focus from low-tier, high volume products to higher-tier product offerings. Net earnings increased 18% to $372 million driven by net sales growth, operating margin expansion, and a lower effective tax rate. Operating margin improved due to a reduction in SG&A as a percentage of net sales, partially offset by reduced gross margin. A reduction in marketing spending was partially offset by an increase in overhead spending due to a shift in spending patterns. Gross margin declined as the impact of price increases and manufacturing cost savings was more than offset by higher commodity costs.