On Tuesday, Procter & Gamble reported earnings and revenue for the quarter that beat analyst expectations, a confident result that suggests consumers are still willing to pay for their products even after price increases, earlier this year. Furthermore, the impressive numbers come at a time when a US economic slowdown seems likely but P&G sales are on the rise in China.
Still, shares of P&G were down more than 1 percent in premarket trading on Tuesday. Both earnings per share and revenue were higher than expected: an adjusted $1.06 over the expected $1.03 and $16.46 billion versus an expected $16.37 billion, respectively.
With that, Procter & Gamble chief financial officer notes, “This is the third quarter in a row of very strong volume, sales, consumption, and market share growth being driven by a strategy of superiority.”
It should not come as a surprise that P&G’s strongest performance was in its beauty care business. This includes brands like Olay and the premium skin care company SK-II skin-care. Fabric and home care and personal health products (like Crest toothpaste, for example) also had a strong showing.
On the other hand, Procter & Gamble’s grooming business—which houses brands like Gillette razors—continue to lag behind. While sales decline have somewhat stabilized, organic sales in its grooming sector fell 1 percent, which is still better than its 3 percent decline from Q2.
As such, Procter & Gamble CEO David Taylor notes, “We delivered another quarter of strong organic sales growth, enabling us to further increase our outlook for the year. Cash generation also remains strong, supporting an increase in our cash productivity target and extending our long track record of dividend increases. Our focus on superiority, productivity and improving P&G’s organization and culture is delivering improved results despite a challenging competitive and macroeconomic environment.”
All this in mind, P&G says it expects 2019 organic sales will still show positive growth of 4 percent. This is particularly good since expectations had originally indicated growth could be as low as 2 percent. Still, total sales are only expected to remain somewhat flat, but could improve by 1 percent by the end of this year.