P&G Rises After Posting Best Sales Growth in at Least a Decade

(Bloomberg) -- Procter & Gamble Co. reported its best quarter of organic sales in more than a decade, with shoppers snapping up its beauty and health-care products in particular, even as its shaving segment took a hit in some regions, including an $8 billion charge. Shares rose in early trading.

• Organic sales growth, which excludes items like acquisitions and currency effects, grew a higher-than-expected 7% in P&G’s fiscal quarter, far-surpassing last year’s 1% growth. The company beat its 4% organic-sales growth target for the fiscal year by a full percentage point.

Key Insights

• Health care was one of the standout segments for the quarter, with organic sales growing 10%, double the pace of the each of the past two quarters this year. There are signs the company may be picking up market share from rivals in the area, which includes items like oral care and cold medicine.
• The grooming business increased sales by 4%, shoring up a key area of concern for the company that had failed to keep pace with other units. But there are some challenges, especially as men in some developed markets like the U.S. shave less and the company faces more competition from razor startups. P&G took the charge to adjust the of its Gillette Shave Care business as a result.
• Robust growth will continue next year, though at a slightly slower pace. P&G expects 2020 organic sales growth of between 3% and 4%. It also said it will repurchase between $6 billion and $8 billion of shares next fiscal year.
• P&G’s price increases in the quarter reinforce that consumer companies aren’t shying away from passing on higher costs to customers. Increased pricing added three percentage points to organic sales in the period. Still, not everyone’s willing to pay more: In the baby segment, the company saw reduced volumes due to higher prices, it said.

Market Reaction

• P&G shares rose as much as 4.3% in New York trading. The advance pushed the stock’s gain to more than 30% this year, outpacing the S&P 500 index.

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