Procter & Gamble has increased its full-year outlook after reporting that income in the third quarter rose by 37%, driven by price increases, cost cutting and the integration of Gillette.

“The combination of strong top-line momentum, improving gross margins and good progress on Gillette integration gives us the confidence to raise our EPS outlook for the fiscal year,” said chairman of the board, president and chief executive A. G. Lafley. “P&G is delivering strong, sustainable earnings growth despite Gillette dilution. Excluding Gillette, P&G is on track to deliver a fourth consecutive year of double digit EPS growth.”

The world’s largest consumer goods company said net income increased to US$2.21bn, or $0.63 per share, from $1.61bn reported for the same period last year.

Sales fell short of analysts’ expectations, increasing by 21% from $14.29bn to $17.25bn. The company said that inventory reduction efforts by retailers like Wal-Mart had reduced shipments while sales growth in developing markets had progressed more slowly than anticipated.

Organic sales, which exclude the effect of acquisitions like Gillette razors and Duracell batteries, rose by 6%. Sales in the snack food division were flat compared to the third quarter of last year. Net sales for the segment increased 4% to $796m, including the negative 2% impact of unfavourable exchange rates.

The company expects sales to rise 19-20% for the full year.

Nonetheless, P&G said that earnings beat expectations and integration of Gillette had shown good progression. Price increases and higher margins in the quarter helped offset the rising costs of raw materials, the company said. These factors prompted P&G to raise its EPS guidance to between $2.61 and $2.63.