P&G Gains After Posting Strong Sales Growth, Raising Outlook

(Bloomberg) -- Procter & Gamble Co. climbed after raising the high end of its full-year sales forecast and posting organic sales growth across all its divisions.

• Organic sales, which exclude things like acquisitions and currency fluctuations, rose 7% in its fiscal first quarter, topping the average of analysts’ projections for 4.8% growth. Revenue in fiscal 2020 will increase 3% to 5%, the company said. It had previously forecast 3% to 4%.

Key Insights

• P&G’s actions to make the business more lean are paying off. The results show the company is keeping up the momentum, matching the previous quarter’s fastest organic sales growth in more than a decade. Chief Executive Officer David Taylor has said that a revised management structure is helping the company make swifter decisions.
• Raising prices is still proving to be a successful strategy. The company said pricing added 1 percentage point to organic sales.
• When asked during a call with analysts about the potential for a slowdown in consumer spending, Chief Financial Officer Jon Moeller said P&G is in a better position than in 2007 because it moved out of discretionary products. “”We don’t see consumers stopping laundry or shampooing or feminine protection during a downturn.”
• Beauty was the strongest segment, posting organic sales growth of 10%, driven by the SK-II skincare brand and China Olay, P&G said. Bodywash, deodorant and hair care also performed well.
• Innovations are boosting the company’s fabric and home care segment, as consumers embrace its new unit-dose detergents like Tide PODS, as well as Mr. Clean concentrated liquids, Magic Erasers and “Clean Freak” spray that can work upside down.

What Bloomberg Intelligence Says:

Procter & Gamble is back to winning ways, with operational gains versus big beauty and home-care peers, and it’s unlikely much will get in its way in the mid term, in our view. A 7% organic sales growth in 1Q is backed by prowess in four of its five units, delivering a 260 basis-point leap in operating margin, including 160 basis points from internal cost savings.

P&G Raises Bar in Big-Is-Beautiful Sales, Profit Drive: React

--Deborah Aitken, BI consumer analyst

Market Reaction

• P&G shares rose as much as 4.3% to $124.17 in New York Tuesday, the biggest intraday gain in almost three months. The stock had gained almost 30% this year through Monday’s close.

Get More

• For more on the results, click here.
• For the company statement, click here.

--With assistance from Karen Lin.

To contact the reporter on this story: Jonathan Roeder in Chicago at jroeder@bloomberg.net

To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Lisa Wolfson, Jonathan Roeder

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