P&G Reports Declines Across All Segments

Currency headwinds continue to batter the home and personal care industry. Procter & Gamble said sales declined across all major segments in the third quarter due to a strong dollar. P&G executives predict that the dollar will drive a 5 to 6% sales decline this fiscal year. Fiscal Q3 sales dropped 8% to $18.1 billion. P&G, which generates some two-thirds of its revenue outside of the US, said currency headwinds ate into its topline by eight percentage points and drove declines across all business lines.

Beauty, hair and personal care sales fell 11%, driven in part by lower volume. Fabric and home care sales fell 9%.

“Our third quarter earnings results were largely in-line with what we had expected,” said CEO AG Lafley in a statement. “As we have done before, we’ll offset foreign exchange over time through a combination of pricing, mix enhancement and cost reduction.”

Taking a closer look at segment results, beauty, hair, and personal care organic sales decreased 3% as a positive impact from pricing was more than offset by lower volume. Innovation-driven organic sales growth in the deodorants, cosmetics and salon hair care categories were more than offset by sales declines mainly from the prestige fragrance and mass skin care categories.

Hair care organic sales fell in developed markets due to increased competitive promotional activity in the US and customer inventory reductions in China.

Grooming segment organic sales increased 9% due to higher pricing across all regions on blades and razors, favorable volume and product mix from premium innovation on both the Gillette and Braun businesses.

Health care segment organic sales increased six percent behind favorable geographic mix and pricing in oral care and higher pricing in personal health care. Higher volume in personal health care driven by a stronger cough and cold season was offset by lower volume in oral care developing markets following price increases.

Fabric care and home care segment organic sales were unchanged versus a year ago as the favorable impact of geographic and product mix, along with increased volume in P&G Professional from distribution gains, was offset by lower volume in fabric care.

Fabric care organic sales growth in developing markets was more than offset by declines in North America due mainly to a base period that included the ship in of several new product innovations. North American fabric care consumption was up two points on the quarter, where both Tide and Gain gained market share.

Home care organic sales were up for the quarter behind pricing-driven growth in developing markets. Baby, feminine and family care segment organic sales increased 2% behind pricing and mix in baby care and feminine care, P&G said.