P&G flags cost cutting as currency hits Q3 sales

Consumer product giant Procter & Gamble’s third quarter sales were hit by the effects of foreign currencies against the US dollar and it will look to price rises, cost and job cuts and marketing cutbacks to improve its bottom line.

P&G reported net sales of $US18.1 billion with sales down 8% versus the prior year period, including a negative eight percentage points impact from foreign exchange. Organic sales grew by one per cent.

‘Our third quarter earnings results were largely in-line with what we had expected,’ said Procter & Gamble Company chairman, president, and CEO A G Lafley.

‘This quarter the productivity progress was offset by foreign exchange. As we have done before, we’ll offset foreign exchange over time through a combination of pricing, mix enhancement and cost reduction.’

P&G is focused on brand initiatives and product innovation, business and brand portfolio simplification, overhead savings and major supply chain productivity initiatives, to improve results in 2015 and beyond.

Organic sales were at or above year ago levels in four of five reporting segments for the March 2015 quarter. Pricing increased sales by 2% with higher pricing in four of five business segments.
The maker of Pampers, Gillette, Pantene, Head & Shoulders, Olay, Mum and Oral B said that falls in organic sales volume were seen in Beauty, Hair and Personal Care (-4%); Health Care (-1%); Fabric Care & Home Care (-1%); and Baby, Feminine & Family Care (-1%); while organic sales volume was up 1% in the Grooming segment.

The divestiture of its Duracell battery business to Berkshire Hathaway is expected to close by calendar year end 2015. The batteries’ results are presented as discontinued operations.
P&G said it now expects organic sales growth of low single digits for the fiscal year and net sales growth down 5%-6% versus the prior fiscal year.

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