The Procter & Gamble Company announced it maintained top-line growth momentum in its fiscal third quarter 2012 and grew core operating profit in a difficult economic and competitive environment. The company also stated it expects to accelerate organic sales growth, while further improving core operating profit growth in the fourth quarter. P&G delivered 2% sales growth to $20.2 billion for the January–March quarter. Organic sales increased 3% driven by price increases, partially offset by geographic and product mix.
"We delivered broad-based organic sales growth, with all of our business segments growing, in a difficult macroeconomic and competitive environment," said chairman, president and CEO Bob McDonald. "We are making good progress against our productivity and cost savings program and improving core operating profit growth as we continue to execute our innovation and portfolio expansion plans. Looking ahead, we expect further acceleration in core operating profit growth in the fourth quarter driven by top-line growth, more favorable cost comparisons and productivity improvements."
Divisionally for the quarter, beauty net sales increased 1% to $4.8 billion on unit volume growth of 1%. Organic sales grew 2%. Price increases added 5% to net sales growth. Mix reduced net sales by 4% due to disproportionate growth in developing regions and product categories, which have lower than segment average selling prices, and unfavorable foreign exchange reduced net sales by 1%. Volume in hair care increased low single digits behind high single-digit growth in developing regions due to product innovation activity and distribution expansions in Asia, which more than offset a mid-single digit decline in developed markets. Volume in skin care, personal care and cosmetics decreased low single digits primarily due to heightened competitive activity in North America. Volume in prestige products increased mid-single digits, with organic volume increasing high single digits driven by initiatives on SK-II and fragrances.
The grooming division’s net sales were in line with the prior year period at $2 billion. Unit volume increased 1% and organic sales were up 2%. Price increases added 3% to net sales growth, while unfavorable product mix decreased net sales by 2% mainly due to disproportionate growth in developing markets. Foreign exchange reduced net sales by 2%. Shave care volume grew low single digits driven by mid-single-digit growth in developing regions behind product and commercial innovation, Fusion ProGlide geographic expansion and market growth. This growth was partially offset by a mid-single-digit decrease in developed regions due to competitive activity and customer inventory adjustments. Volume in appliances increased low single digits primarily due to product innovation and in-store programs.
Also, as announced in February 2012, the company is currently executing a productivity and cost-savings plan to reduce spending across all areas. As part of this plan, the company expects to incur approximately $3.5 billion before-tax in restructuring costs over a four-year period.
And P&G announced the addition of two brands, SK-II and Vicks, to the elite group of billion-dollar brands, which represents brands with annual net sales of at least one billion dollars. This increases the company's billion dollar brands from 24 to 26. Both brands have reached the billion-dollar brand status through sustained product innovation and geographic expansion, with SK-II becoming the first Asian "homegrown" billion dollar brand.