The Procter & Gamble Company announced net sales declined 3% to $20.4 billion for the October–December quarter, driven by unfavorable foreign exchange and lower shipment volume. Organic sales, which exclude the impacts of acquisitions, divestitures and foreign exchange, were up 2% for the quarter. Operating margin declined 90 basis points. Diluted net earnings per share were $1.58, a 61% increase.
"As expected, this was a particularly challenging quarter," said A.G. Lafley, chairman of the board and CEO. "We expect the environment will remain difficult and highly volatile, at least in the near term. We are focused on the fundamentals that are critical to success in our business. We will continue to build brands that deliver better value for consumers by leading innovation and managing cost and productivity programs with discipline. Our efforts in these areas give me confidence that P&G will continue to grow profitably and generate attractive returns for shareholders over the long-term."
Beauty net sales decreased 4% to $4.9 billion for the quarter. Organic sales were in line with the previous year period. Retail hair care volume grew low-single digits behind solid growth in developing regions. Every major retail hair care brand, including Pantene, contributed to volume growth led by mid-single-digit or higher growth of Head & Shoulders, Herbal Essences, Rejoice and Nice 'N Easy. Professional hair care volume declined mid-single-digits primarily due to market contractions. Personal cleansing volume decreased high-single-digits primarily due to trade inventory reductions and market contractions. Volume in skin care decreased mid-single-digits mainly due to the divestiture of Noxzema. Prestige fragrances volume decreased high-single-digits due mainly to trade inventory reductions, market contractions and a shift in initiative timings to the second half of fiscal 2009, partially offset by market share gains. Net earnings declined 10% during the quarter to $799 million primarily due to a reduction in net sales and lower operating margin from higher commodity costs.
Grooming net sales declined 7% during the quarter to $2.0 billion. Organic sales increased 1%. Price increases taken across premium shaving systems added 4% to net sales.
For the 2009 fiscal year, the company expects organic sales to grow 2–5%. The combination of pricing and product mix is expected to impact sales growth by a positive 4–5%. Organic volume is expected to be flat to down 2%. Foreign exchange remains highly volatile and is expected to reduce sales by about 5%. Total sales growth is expected to be flat to -4%.
The full report is available here.
