Procter & Gamble continues to reap considerable earnings as it slowly integrates the Gillette brands.

In its second fiscal quarter ended Dec. 31, the company reported net earnings rose 12 percent, to $2.86 billion, or 84 cents per diluted share, from $2.55 billion, or 72 cents, a year ago as net sales gained 8 percent, to $19.73 billion.

“We delivered balanced top- and bottom-line growth driven by a strong innovation program, ongoing focus on cost discipline and continued good progress on the Gillette integration,” Clayton Daley, P&G’s chief financial officer, said on a company conference call.

Gillette’s blades and razors division continued to be popular with consumers. The segment reported an 11 percent increase in net sales, to $1.28 billion, aided by the popularity of the Fusion and Mach3 brands. Home and fabric care also performed well; net sales climbed 11 percent, to $4.68 billion, led by the Tide, Febreze, Cascade and Gain brands.

Line extensions of P&G’s mass beauty and hair care brands, including Pantene, Head & Shoulders, Herbal Es­sences, and Oil of Olay — in addition to its prestige fragrance, Dolce & Gabbana “The One” launch — helped boost the division’s net sales 8 percent, to $5.88 billion.

“If you look at our beauty business, it’s been performing,” said president and chief executive officer A.G. Lafley. “We’ve benchmarked the best beauty care companies in the world over the last several quarters, and our organic sales rate is right there with L’Oréal, quarter by quarter, and cumulatively we generate very good margins. We have great brands and phenomenal innovation.”

Based on its second-quarter performance, the company raised its earnings per share guidance to $2.99 to $3.03 for the fiscal year, up 13 to 15 percent from a year prior. For the third quarter, it expects earnings per share to be in the 72 to 74 cents per share range.

This story first appeared in the January 31, 2007 issue of WWD. Subscribe Today.

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