P&G First Quarter 2010 Sales Exceed Expectations

The Procter & Gamble Company reported net sales of $19.8 billion for the July-September 2009 quarter, which exceeded the company's guidance. Organic sales growth was up 2% versus a guidance range of flat to -3% on better than expected results across most business segments. Diluted net earnings per share increased 3% to $1.06, above the company's guidance range of $0.95 to $1.00. The company raised its outlook for the October-December quarter and fiscal 2010 organic sales growth, citing modestly higher expectation for market growth. The company also increased the low end of its fiscal year guidance range by $0.03 per share to reflect the higher top-line growth projection.

"Our September quarter results give us encouragement we are making the right choices to grow market share profitably," said Bob McDonald, president and CEO, P&G. "We are investing in innovation, expanding our portfolio and improving consumer value to serve more consumers, in more parts of the world, more completely. We are driving simplification and improving execution while leveraging scale to create cost efficiencies that help fund these investments and accelerate growth."

Beauty net sales were down 5% for the quarter to $4.9 billion on a 2% decline in unit volume. Organic sales grew 2%. Unfavorable foreign exchange impacted net sales by 7%. Price increases and positive product mix added 3% and 1% to net sales, respectively.

The professional salon division volume declined double digits due to the exit of non-strategic businesses and continued market contractions. Prestige volume decreased high single digits primarily due to the continued contraction of the fragrance market, partially offset by double-digit growth of SK-II. The female beauty division volume was down mid-single digits primarily due to lower shipments, share losses on non-strategic personal cleansing brands, lower merchandising and initiative activity in cosmetics and the fiscal 2009 divestiture of Noxzema. Net earnings decreased 1% for the quarter to $777 million as negative foreign currency impacts and lower net sales were mostly offset by lower overhead and marketing costs and manufacturing cost savings.

Grooming net sales in the first fiscal quarter decreased 11% to $1.9 billion. Organic sales declined 2%. Unfavorable foreign exchange and lower unit volume reduced net sales by 9% and 8%, respectively. These impacts were partially offset by positive pricing impacts of 6%. Volume in male blades and razors declined high single digits behind market contractions. Gillette Fusion volume continued to grow but was more than offset by volume declines in legacy shaving systems. Volume in male personal care declined high single digits behind lower shipments of shave preparation products due to increased competitive promotional activity. Volume in Braun was down double digits mainly due to market contractions, particularly in home and hair care appliances. Net earnings declined 21% versus the prior year period to $351 million primarily driven by lower net sales and negative foreign currency impacts.

The complete report is available here.

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