By Richa Naidu and Soundarya J
(Reuters) – Procter & Gamble Co's (N 🙂 quarterly revenue and profits hit Wall Street expectations Tuesday, sending shares even while the world's largest personal goods company took down $ 8 billion on the Gillette shaving business.
Increased by price increases and strong demand for SK-II and Olay beauty products, P & G's organic sales increased by 7%. Price increases contributed 3 percentage points to organic sales growth, a carefully monitored calculation that excludes elements such as acquisitions, sales and currency effects. Shares increased by 4.3% in trading in the premarket.
However, P&G reported a net loss of about $ 5.24 billion, or $ 2.1
Gillette razors, gels and foams are some of P & G's most internationally distributed products. P&G said the write-down was mainly due to currency fluctuations, increased competition over the past three years and a shrinking market for knives and razors, as consumers in developed markets shave less frequently. Net sales in the grooming business, which includes Gillette, have slumped in 11 of the past 12 quarters.
"Original book values for Gillette were established almost 14 years ago in 2005 … new competitors have come at prices below category averages," CFO Jon Moeller said in a call. P&G paid $ 57 billion in 2005 for Gillette, the world's No. 1 barber who is more than a century old.
The company has cut prices and invested in new products in its grooming business, hoping to regain market share from upstart barbers bought by rivals, such as Edgewell Personal Care & # 39; s (N 🙂 Harrys & Unilever & # 39; ; s (L 🙂 Dollar Barber Club.
Excluding commodities, the company earned $ 1.10 per share, beating the average analyst estimate of $ 1.05.
"Expectations crept higher into the pressure, but P&G far exceeded even the most optimistic expectations." Wells Fargo (NYSE :), analyst Bonnie Herzog said, adding that P & G's organic revenue growth of 7% was the strongest in 13 years.
Like other consumer goods companies, P&G has raised the prices of many of its products to cope with rising freight and commodity costs that have dented margins. Organic sales in P & G's beauty business rose 8%, boosted by demand for the super-premium SK-II brand and Olay skincare products. In the fabric and home care unit, the company's largest business selling Tide detergent and Febreze air fresheners, organic sales rose by 10%.
The company's net sales rose 3.6% to $ 17.09 billion in the fourth quarter, beating analysts' average estimate of $ 16.86 billion, according to IBES data from Refinitive.
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