Procter & Gamble has kicked off the year with a slate of product launches, as its beauty business showed higher profits but weaker sales.
Just out is the new Pantene Pro-V featuring an anti-oxidant complex to prevent hair damage, with Gisele Bundchen now representing the brand in North America. Old Spice has been expanded into hair care with a collection targeting younger men, and Crest is readying the February introduction of Crest 3D Luxe, a technologically advanced tooth whitening system that claims to lift 90% of stains in five days and strips that adhere better.
Second quarter net sales for beauty slid 2% to $5.28 billion, with organic sales flat. Net earnings grew 6% to $927 million. The grooming segment was flat at $2.1 billion, with organic sales up 3%, and net earnings of $553 million, up 7%. Jon Moeller, chief financial officer, speaking on a conference call said cosmetics sales were strong in the quarter helped by the Cover Girl Hunger Capitol collection and Bombshell mascara.
Skin care has continued to be a trouble spot for P&G, but Jon eschewed suggestions by analysts that an acquisition could help. “P&G has the skills and partnerships needed to organically fill in any gaps,” he said, pointing to the Olay Fresh Effects range for young women, as example. The firm’s beauty brands had a strong presence during the Grammy’s: commercials for Olay Regenerist Luminous and new anti-age items with skin whitening properties aired during the Grammys.
Total company sales for the quarter were flat at $22.3 billion, with core earnings per share down 1% to $1.21. Net earnings dropped 15% to $3.47 billion. On a currency neutral basis, earnings increased 8% in the quarter. Jon Moeller said P&G is on track to meet its year forecast of 3% to 4% organic growth and EPS growth of 5% to 7%.
Productivity remains high priority and previously announced headcount reductions are ahead of schedule. A savings of $1.6 billion is expected this year. Coming next is a reorganization of the supply chain into multi-category manufacturing facilities, to allow, “for faster initiative expansion,” said Jon.
Digital, social and mobile tools now account for about 30% of media spending. And, P&G has named a woman to head up R&D. Kathleen B. Fish will become P&G’s chief technology officer in February, succeeding Bruce Brown who is retiring after 34 years.