P&G Reports Flat Sales in First

The Procter & Gamble Company today said first quarter net sales remained flat at $9.77 billion. Net earnings slipped from $1.16 billion to $1.10 billion, but the total included a $238 million after-tax restructuring charge related to the company’s initiative to streamline its organization structure and business portfolio. Core earnings rose 4% to $1.34 billion. P&G said first quarter results were above consensus expectations and reflects the growing benefits of the company’s focus on building core brands and delivering its restructuring savings commitments. For the quarter ended September 30, 2001, unit volume grew 2% versus the prior year, excluding the 1% impact of divestitures.

“The company delivered solid core operating earnings growth. We exceeded expectations and made good progress in what we acknowledged, even prior to September 11, would be a difficult environment,” said P&G president and chief executive, A.G. Lafley. “We’re pleased with the continued growth in our core operating results, which is a direct result of making clear strategic choices and cost efficiencies flowing from our organization restructuring.”

By business segment, health care delivered double-digit growth behind the sustained development of initiative programs on leading brands. Unit volume was up 19% driven, in part, by excellent results in oral care. Net sales grew 21% to $1.18 billion, excluding a 2% unfavorable exchange impact. Net earnings increased 73% to $140 million, reflecting the benefit of high margin brands driving growth. In oral care, Spinbrush is vying for value share leadership in the U.S. electric toothbrush market, while Whitestrips achieved $100 million in net sales since its launch in May 2001.

Beauty care sales were flat at $1.77 billion. Unit volume fell slightly due to Clearasil divestiture impacts. Net earnings, however, grew 22% to $326 million, primarily due to marketing support efficiencies behind growing businesses and lower launch expenditures, coupled with disciplined cost management.

Fabric and home care sales continued to disappoint. Unit volume decreased 2% versus the prior year comparison, despite growth in Western Europe and developing markets. Excluding 2% negative foreign exchange and a 1% impact of divestitures in the prior year, net sales fell 3% to $2.88 billion and net earnings fell 10% to $450 million versus year-ago, primarily due to lower sales and minor brand divestitures in the prior year.