Q2 ‘Challenging’ for P&G

The Procter & Gamble Company reported second quarter fiscal year 2015 net sales were $20.2 billion, a decrease of 4% versus the prior year, including a negative 5% point impact from foreign exchange.

“The October – December 2014 quarter was a challenging one with unprecedented currency devaluations,” said chairman, president and chief executive officer A.G. Lafley. “Virtually every currency in the world devalued versus the US dollar, with the Russian Ruble leading the way. While we continue to make steady progress on the strategic transformation of the company—which focuses P&G on about a dozen core categories and 70 to 80 brands, on leading brand growth, on accelerating meaningful product innovation and increasing productivity savings – the considerable business portfolio, product innovation, and productivity progress was not enough to overcome foreign exchange.”

Lafley contined, “The outlook for the year will remain challenging. Foreign exchange will reduce fiscal 2015 sales by 5% and net earnings by 12%, or at least $1.4 billion after tax. We have and will continue to offset as much of this currency impact as we can through productivity driven cost savings. And we will continue to invest in our businesses, brands and product innovation, because it is the right thing to do for the mid- and long-term, while we deliver another year of strong cash returns to shareowners. We are adjusting fiscal year earnings targets accordingly. We are mobilized to deliver another fiscal year of modest organic sales growth, and to continue to grow market share on more category-leading brands. We are working to deliver core earnings per share as close as possible to those of last fiscal year.”

In the October – December quarter, organic sales were up two percent, with growth in four of five reporting segments. Organic volume was unchanged versus the prior year, according to P&G.

P&G”s Beauty, Hair and Personal Care segment organic sales decreased one percent driven primarily by declines in the prestige and skin and personal care categories. This was partially offset by innovation-driven sales growth in the salon professional and antiperspirant and deodorant businesses.

Grooming segment organic sales increased two percent due to higher pricing and innovation on Gillette grooming and innovation on Braun. This growth was partially offset by lower shipment volume.

Fabric Care and Home Care segment organic sales increased three percent as growth on Fabric Care from product innovations and consumer value corrections were partially offset by lower volume in Home Care, mainly in Asia.

P&G's Baby, Feminine and Family Care segment organic sales increased four percent behind pricing and innovation in Baby Care and Feminine Care, partially offset by lower sales in Family Care due to a soft period in Mexico and consumer value interventions in the U.S.

P&G maintained its guidance for organic sales growth in the low-to-mid single digit range. Net sales growth is now expected to be lower versus the prior fiscal year in the range of -3% to -4%, including a negative five point headwind from foreign exchange and a one point impact from minor brand divestitures, according to the firm.