P&G Reports Accelerated Sales; Unit Volume Growth Q2 09/10

The Procter & Gamble Company delivered net sales growth of 6% for the October-December quarter to $21.0 billion. Organic sales grew 5%, which was at the top of the company's guidance range. Diluted net earnings per share were $1.49 and diluted net earnings per share from continuing operations were $1.01. Core EPS increased 22% to $1.10 for the quarter, above the company's guidance range, on better than expected sales growth and margin expansion. The company raised its expectations of fiscal 2010 organic sales growth and core EPS.

"We are pleased with the top- and bottom-line underlying results for the quarter," said Bob McDonald, chairman of the board, president and CEO. "Our investments in innovation, portfolio expansion, marketing support and consumer value are working. We continue to drive simplification and leverage our scale to create cost advantages and accelerate growth. While economic uncertainty remains, we're confident these strategies will enable P&G to serve more consumers in more parts of the world, more completely and deliver profitable market share growth."

Beauty net sales increased 7% in the second fiscal quarter to $5.2 billion on a 2% increase in unit volume. Organic sales increased 4% versus the prior year period. Price increases, primarily in developing regions to offset currency impacts, and favorable foreign exchange added 2% and 3%, respectively, to net sales growth. Organic volume, which excludes acquisitions and divestitures, was up 3% behind mid-single-digits growth in developing regions.

Organic volume in hair care increased mid-single digits mainly due to strong growth in Asia. Volume in female beauty increased low single digits primarily due to higher shipments of female skin care and personal cleansing products. Volume in the salon professional division was down double digits due to the exit of non-strategic businesses, while organic volume declined mid-single digits mainly behind continued market contractions. Volume in prestige decreased low single digits as continued contraction of the fragrance market was mostly offset by trade inventory reductions in the prior year period. Net earnings were up 7% versus the prior year period to $876 million on higher net sales and operating margin expansion, partially offset by a higher tax rate.

Male personal care volume declined high single digits behind increased competitive promotional activity on shave preparation products and distribution declines on a non-strategic deodorant brand.

The complete financial statement is available here.