"This was another solid quarter of broad-based sales and earnings growth during a period of heavy Gillette integration activity," said A.G. Lafley, chairman of the board, president and chief executive, P&G. "The results this quarter and a positive outlook for sales and margin improvement give us confidence to raise our top and bottom line guidance for the fiscal year."
Every reportable segment grew sales led by double-digit increases in blades and razors and fabric care/home care. P&G states that sales increased behind solid market share growth and continued success on product initiatives—including Gillette Fusion, Tide Simple Pleasures, Febreze Noticeables, Olay Definity, Pantene Color Expressions, Head & Shoulders restage and Crest Pro Health. Volume increased 4% and organic volume, which excludes the impacts of acquisitions and divestitures, increased 5% during the quarter. Pricing added 1% to sales growth and favorable foreign exchange added an additional 3%. Organic sales, which exclude the impacts of acquisitions, divestitures and foreign exchange, increased 5%. Net earnings during the quarter increased 12% to $2.86 billion.
Beauty net sales increased 8% during the quarter to $5.88 billion driven by solid volume growth across most categories. Organic sales increased 5%, despite a negative impact from sales disruptions to the SK-II franchise in Asia. Volume was up 4% and organic volume increased 5% behind mid-single digit organic volume growth in hair care, skin care and feminine care and high-single digit organic growth in prestige fragrances.
Gillette blades and razors market consumption increased 7% behind strong results on Fusion in developed regions and on Mach 3 in developing regions. Volume increased 4%during the quarter while favorable product mix and pricing each added 2% to sales growth.
The company raised its organic sales growth outlook for the 2007 fiscal year due to solid business momentum and a positive outlook for the remainder of the fiscal year. The company now expects organic sales to grow by approximately 5-6%. This compares to the previous guidance range of 4-6%. The company also raised its earnings per share outlook for the fiscal year due to the strong results in the December quarter. The company now expects earnings per share to be in the range of $2.99 to $3.03, up 13-15% versus prior year. For the January/March quarter, organic sales are expected to grow by 5-7%.