Consumer products giant Procter & Gamble saw its share price fall by 6.4% following the publication of disappointing quarterly results. Weak demand in China and falling prices in the West seem to be taking their toll. What's going on at the consumer goods behemoth?
Procter & Gamble has announced net sales of $20.5 billion for the April to June 2024 quarter, unchanged on the previous year. Organic sales rose by 2%, but this result disappointed investors, who were expecting 3.4%. The unfavorable currency impact of 2% contributed to this stagnation.
The operating margin was 18.9%, compared with 20.3% the previous year, due to higher SG&A expenses. These expenses increased by 240 basis points, due to wage inflation (up 30 basis points) and marketing expenses (up 300 basis points). These increases raise questions, as this level of spending could become the new norm.
Procter & Gamble does not foresee an improvement until the second half of 2025, and anticipates a fluctuating year. The company says that general market sentiment in China and the Middle East has still not improved.
In detail:
Beauty: Net sales fell by 1%, despite organic growth of 3%. Higher prices were offset by lower sales of the super-premium SK-II brand and in China.
Personal Care: Organic sales rose by 7%, thanks to higher prices in Latin America and volume growth. However, negative currency effects offset this growth overall.
Healthcare: Organic sales rose by 4%. Sales of Bucaux Care rose sharply, thanks to a premium product mix and volume growth in North America and Europe.
Home Care: Organic sales rose by 2%. Tissue Care sales were stable, with volume growth in North America and Europe offset by lower prices due to increased promotional spending.
Baby, Feminine and Family Care: Organic sales fell by 1%. Baby Care sales were down a few percentage points, due to lower volumes linked to market share losses.
Procter & Gamble Company is one of the world's leaders in producing and selling consumer products. Net sales break down by family of products as follows:
- care and hygiene products (38.1%): oral hygiene products (toothpastes, toothbrushes, mouthwashes, etc.; Crest, Oral-B, Scope brands, etc.), pharmaceutical products (Metamucil, Neurobion, Pepto Bismol, Vicks, etc.), toilet training pants (Luvs, Pampers), toilet papers and paper towels (Bounty, Charmin, Puffs), feminine protection products (Always, Always Discreet and Tampax), etc.;
- home care and laundry products (35.1%): dishwashing liquids, detergents, stain removers, fabric softeners, deodorizers, bleaches, etc. (Ariel, Downy, Gain, Tide Cascade, Dawn, Fairy, Febreze, Mr. Clean, Swiffer, etc.);
- beauty products (18.1%): hair care products (shampoos, colorings, and cream rinses; Head & Shoulders, Herbal Essences, Pantene and Rejoice brands), body care (soaps, shower gels, deodorants, etc.; Camay, Zest, Secret, Old Spice) and cosmetics (make-up and facial care; Max Facto, Covergirl and Olay);
- shaving products (7.9%): blades, razors, batteries, etc. (Braun, Gillette and Venus brands);
- other (0.7%).
