Multinational manufacturer The Procter & Gamble Company has announced first quarter net sales growth of 27% to $18.79bn and an organic sales increase of 6%, which was at the top end of the company’s long-term target range.
However, the company’s snacks division, which includes the Pringles crisp range, showed a decline in volumes compared with the same period last year.
The company’s snacks and coffee segment, which also includes pet health, had a net sales increase of 10% during the quarter to $1.06bn. Volume grew 5% relative to a base period that included a reduction in the coffee business from Hurricane Katrina, P&G said. Coffee volume increased more than 50% during the quarter as a result of the base period impact of Katrina as well as strong results behind the recent launches of Folgers Simply Smooth and Gourmet Selections.
The volume growth of coffee was partially offset by a volume decline in snacks though, due to customer inventory adjustments in Western Europe following the World Cup soccer promotion and strong competitive activity in the UK and North America, the company added. Net earnings for the segment increased 14% to $87m during the quarter.
Net earnings at the group as a whole increased 33% during the quarter to $2.70bn behind strong sales growth, including the addition of the Gillette brand, and continued margin improvement. Profit margin expanded during the quarter as sales growth, cost savings projects and the benefit of adding the higher margin Gillette business more than offset acquisition-related expenses and higher commodity costs.
“The company delivered broad-based growth behind strong innovation on both the base business and Gillette. We are delivering our growth commitments and continue to make good progress with the Gillette integration,” said chairman of the board, president and chief executive A.G. Lafley. “Looking forward, we expect earnings per share growth to accelerate driven by strong base business results, the ramp-up of Gillette synergies and an improving cost environment.”
Organic sales at the firm excluded the impacts of acquisitions, divestitures and foreign exchange.
For the 2007 fiscal year, the company expects total organic sales to grow by 4-6% – in line with its long-term target range. The combination of pricing and product mix is expected to have a neutral to positive one percent impact on sales growth, the company said.
The company raised its earnings per share outlook for the fiscal year due to a better commodity and energy cost forecast. The company now expects earnings per share to be in the range of $2.97 to $3.02, which is up 13 to 14% versus prior year.
For the October-December quarter, organic sales are expected to grow by 4-7% by the company, and total sales are expected to increase 5-8% compared to the same period last year.