Procter & Gamble reported earnings for its fiscal third quarter yesterday, and there was a lot to like in the company's results. But P&G also delivered some bad news to investors. And there were a few tidbits in the report that were downright ugly.
Here's how things shook out for the company's latest results.
The best news for P&G shareholders came in the form of strong profits. Earnings were up 7%, as P&G's cost-cutting program continued to pay dividends. Better yet, the company's sales growth came mostly from volume increases rather than price boosts, flipping the trend from past quarters. And P&G also managed to claw back more of the market share it had lost, with gains in over two-thirds of its business in the U.S., and over 50%, companywide.
Unfortunately, those sales gains were below the market's expectations, and at the low end of P&G's own guidance. The company reported just 3% revenue growth for the quarter, meaning that it won't have the blockbuster end to its fiscal year that it had hoped for.
By comparison, rival Unilever managed to grow sales by 5% last quarter on a better than 8% rise in its personal care business. P&G had been aiming for its new product pipeline to drive bigger revenue gains, but that hasn't happened.
P&G's worst-performing business was its beauty segment. Sales fell by 1%, as rivals turned up their level of promotions and succeeded in fending off P&G's competitive attacks. The Olay skin care line continued its struggles, and new hair care product introductions from Vidal Sassoon and Pantene just weren't strong enough to spark sales growth.
Overall, though, I think these were solid results. P&G's Tide Pods brand was a major hit in the U.S., and is just now starting to roll out internationally. That's a good example of the type of innovation that P&G is shooting for, even if most new products won't see that kind of quick success.
The company affirmed its full year guidance, and even raised its earnings forecast for the year, so the turnaround strategy remains on track. P&G's sales growth might have hit a snag last quarter, but the company is still moving in the right direction.
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