P&G raises full-year forecast after beauty, healthcare brands drive profit beat
(Reuters) – Procter & Gamble Co (PG.N) on Tuesday raised its full-year sales and profit forecasts after a better-than-expected first quarter, as it sold more toothpaste and expensive face cream.
FILE PHOTO: The logo for Procter & Gamble Co. is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., June 27, 2018. REUTERS/Brendan McDermid
Shares of the world’s biggest personal care goods company rose 4.1% in premarket trading.
P&G, which makes Tide detergent, Pampers diapers and Pantene shampoo, has been raising prices and investing in new products across most of its business, hoping to claw back market share from upstart brands that have cropped up in recent years.
“P&G is clearly firing on all cylinders,” Wells Fargo analyst Bonnie Herzog said. “P&G raised its full-year guidance across the board, which is not typical so early in the fiscal year, and evidence management has conviction that momentum will continue.”
P&G forecast full-year core earnings growth in the range of 5% to 10%, compared with its prior estimate of 4% to 9% growth. The company expects full-year sales to grow as much as 5%, compared with earlier expectation of 4%. P&G retained its lower-end sales growth forecast of 3%.
The company also received a 0.4 percentage point sales boost from Japan, where retailers and shoppers hoarded beauty, household, baby and fabric care products and Baby businesses ahead of a planned VAT increase in October.
Organic sales, which exclude acquisitions, divestitures and currency effects, rose 7% in the company’s fiscal first quarter, ended Sept. 30. P&G said organic sales rose 10% in its beauty business, which makes SK-II and Olay products. The company, which launched its Oral-B Genius X electric toothbrush and Crest toothpaste aimed at people with sensitive teeth and gums, said organic sales rose 9% at its healthcare business.
Organic sales in the grooming unit, a sore point for the company after it took a $8 billion writedown for its Gillette shaving business in the fourth quarter, reported 1% growth.
Chief Financial Officer Jon Moeller said in a post-earnings media call that P&G was trying to raise awareness about new Gillette products. Rivals like Unilever’s (ULVR.L) Dollar Shave Club and Edgewell Personal Care’s (EPC.N) Harry’s have proven to be stiff competition in the shaving category.
Overall, net sales climbed 6.6% to $17.80 billion, beating analysts’ average estimate of $17.42 billion, according to IBES data from Refinitiv. Net income attributable to the company rose to $1.36 per share from $1.22 per share a year earlier. Excluding items, P&G earned $1.37 per share, beating estimates of $1.24.
Reporting by Soundarya J in Bengaluru and Richa Naidu in Chicago; Editing by Bernard Orr and Steve Orlofsky