Procter & Gamble Co., which turned 171 years old this month, reported an 8.7 percent gain in first-quarter profits as the company continued to focus on cost discipline and selective price increases.
This story first appeared in the October 30, 2008 issue of WWD. Subscribe Today.
Net income for the quarter ended Sept. 30 was $3.35 billion, or $1.03 a diluted share, up from $3.08 billion, or 92 cents a share, in the year-ago period.
Sales gained 9 percent to $22.03 billion from $20.12 billion. Price increases added 3 percent to net sales. Organic sales rose 5 percent, marking the 25th consecutive quarter in which P&G delivered organic sales growth at or above its target of between 4 and 6 percent.
Boosted by double-digit increases at Gillette, Fusion, Head & Shoulders, Cover Girl and SK-II, net sales for P&G’s beauty business gained 12 percent to $5.13 billion, while grooming grew 6 percent to $2.14 billion. Cosmetics enjoyed double-digit volume growth while hair care products advanced in the mid- to high-single digits. Organic sales in the beauty category gained 6 percent.
During an earnings call Wednesday, chairman and chief executive officer A.G. Lafley told analysts that P&G is better positioned for this downturn than in the past because it has “a stronger portfolio among categories and a stronger portfolio within the brands.”
Clayt Daley, vice chairman and chief financial officer, added that P&G’s tiered price strategy allows consumers a wide range of choices. “Innovation is still driving trade-up [to higher price points], and trade-up is still working in the market,” said Daley. “Innovation works because innovation creates value.”
During the call, Daley confirmed his plans to retire Sept. 16, 2009, after 35 years at the company. He will step down as cfo on Jan. 1 at which time Jon Moeller will succeed him. Moeller is currently vice president and treasurer.