The Procter & Gamble Company increased organic sales for the April-June quarter by 3% driven by price increases, partially offset by geographic mix. Net sales were $20.2 billion, a decrease of 1% versus the prior year period. Foreign exchange reduced net sales by 4%. The company continued to deliver broad-based organic sales growth, with four of five business segments increasing versus the prior year.
“We enter fiscal 2013 with very strong developing market momentum, strengthened plans on our core developed market business, and with the benefit of a $10 billion cost savings program, which is well underway,” said P&G Chairman, president and CEO Bob McDonald. “Despite a difficult macro environment, we see significant opportunities for top- and bottom-line growth.”
Net sales increased 3% to $83.7 billion for fiscal 2012 on unit volume that was in line with the prior year period. Organic sales also grew 3%. Price increases across all segments improved net sales by 4%, partially offset by unfavorable geographic and product mix which reduced net sales by one percent.
The company’s beauty care division’s net sales decreased 4% to $4.8 billion for the quarter, and organic sales grew 1%. Unit volume decreased 1%. Price increases added 4% to net sales growth. Mix reduced net sales by 3% due to disproportionate growth in developing regions and in product categories that have lower than segment average selling prices. Unfavorable foreign exchange reduced net sales by 4%. Volume in hair care was in line with the prior year period due to mid-single digit growth in developing regions driven by market growth, product innovations and distribution expansions in Asia. The growth in developing regions was offset by developed regions, which decreased mid-single digits due to competitive pressure in North America and Western Europe. Volume in beauty, which includes skin, cosmetics and personal care product categories, decreased mid-single digits due to market share softness in the United States and China. Volume in prestige products increased mid-single digits, driven by initiative activity across fragrances and SK-II. Net earnings were in line with the prior year period at $382 million as net earnings margin expansion offset the impact of reduced net sales. Net earnings margin increased due to a reduction in the effective tax rate partially offset by higher commodities and unfavorable geographic and product mix.
Grooming net sales for P&G for the quarter decreased 6% to $2 billion. Unit volume and organic sales were in line with the prior year period. Price increases added 1% to net sales growth, while unfavorable product mix decreased net sales by 1% mainly due to disproportionate growth in developing markets. Foreign exchange reduced net sales by 6%. Shave care volume was in line with the prior year period. Low single digit growth in developing regions behind market growth and product and commercial innovation was offset by a low single digit decrease in developed regions due to competitive activity and market contraction in Western Europe. Volume in appliances increased mid-single digits with developed markets up double digits primarily due to product innovation and in-store programs. Grooming net earnings were in line with prior year at $406 million as an expansion in operating margin was offset by the decrease in net sales. Operating margin increased mainly due to gross margin expansion resulting from manufacturing cost savings and higher pricing.
Overall, net sales for fiscal 2013 are expected to be in line to down 2% versus the prior year, including a negative 4% impact from foreign exchange. Organic sales are expected to increase 2–4%. Pricing is expected to add 2% to sales, and unfavorable product and geographic mix is expected to reduce sales by 1%. The company also said it will repurchase $4 billion in P&G stock over the course of the fiscal year.