By Serena Ng and Michael Calia
Procter & Gamble Co.'s profit grew just slightly in the
first three months of the year, as the world's largest
consumer-products maker struggled to expand in slow-growing markets
where shoppers have cut back their spending on many everyday
items.
The maker of Tide detergent, Pampers diapers and Olay skin
creams said its net income rose 1.7%, to $2.6 billion, on flat
revenue of $20.6 billion.
Excluding currency moves, acquisitions and divestments,
P&G's sales rose 3%, putting the company on track to achieve
its full-year target of 3% to 4% growth in what it calls organic
sales.
Nearly a year into Chief Executive A.G. Lafley's second stint at
the helm of the company, P&G has sought to accelerate cost
cuts, increase productivity gains and sharpen its focus on some of
its biggest brands as it tries to improve profitability and catch
up with the faster growth rates of rivals. Currency swings and
anemic growth in many product categories, however, have dampened
the results of those efforts.
"One of the biggest headwinds is market growth, both in
developing and developed markets," Jon Moeller, P&G's chief
financial officer, said on a conference call with analysts
Wednesday. He added the company is trying to combat the trend with
new products and by getting more consumers to "trade up" to pricier
offerings.
"But that is challenging, and in a 3% growth world...that's just
the reality that we are going to have to adapt to," he said.
P&G's shares have slipped by more than 3% over the past
year, compared with a 19% gain for the S&P 500 index. That
performance has been better than rival Unilever PLC's, but has
trailed Colgate-Palmolive Co.'s gains.
Mr. Moeller said P&G isn't planning large-scale price
increases in the U.S., the company's biggest market. But he said
P&G continues to believe Americans will pay premium prices for
products such as its Tide Pods laundry capsules and Crest
teeth-whitening strips. During the recent quarter, the company's
laundry detergent sales grew after P&G rolled out laundry
capsules under its Gain brand and quietly raised prices of some
varieties of Tide liquid detergent by shrinking the number of loads
per bottle.
Later this month, P&G plans to launch a premium-priced razor
handle under its Gillette Fusion series called the ProGlide
FlexBall, according to marketing documents reviewed by The Wall
Street Journal, in another effort to get shoppers to shell out an
extra dollar or two for an upgraded product. The move comes as
razor sales are down broadly in the U.S. as more men sport beards
or buy cheaper razors.
P&G said organic sales of beauty products including Pantene
shampoo grew slightly during the recent quarter, and diaper sales
also improved. Sales of its family care products, which include
Charmin toilet paper and Bounty paper towels, declined as rival
brands stepped up promotions, Mr. Moeller said.
The company is about three years into a five-year cost cutting
plan, which has so far enabled its profits to grow faster than
sales. Selling, general and administrative expenses in the recent
quarter fell 5% to $6.5 billion.
Write to Serena Ng at serena.ng@wsj.com and Michael Calia at
michael.calia@wsj.com
Corrections & Amplifications
An earlier version of the story incorrectly said the company cut
its profit guidance for the year. P&G affirmed February's
lowered view.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires