CBO reporter Li Jianzi
In a year when instabilities such as the epidemic and war have exacerbated market changes, P&G is still full of confidence in earnings expectations.
Recently, Procter & Gamble announced its financial results for the third quarter of fiscal 2022. According to the financial report, Procter & Gamble's net sales in the third quarter were US$19.381 billion (about 124.971 billion yuan), an increase of 7% year-on-year, higher than the market expectation of US$18.73 billion (about 120.773 billion yuan), and 18.109 billion US dollars (about 116.769 billion yuan) in the same period of 2021; Net income attributable to the Company was US$3,355 million (approximately RMB21,633 million), up 3% year-on-year, from US$3.269 billion (approximately RMB21.079 billion) for the same period in 2021 and diluted earnings per share of US$1.33 (approximately RMB8.58) compared to US$1.26 (approximately RMB8.12) for the same period in 2021.
It is worth mentioning that the organic growth after deducting mergers and acquisitions and exchange rate factors reached an annual increase of 10%, setting the largest increase in P&G in 20 years.
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2% year-over-year growth in beauty
Raised full-year sales forecasts
By business, P&G's net sales of beauty products in the third quarter were US$3.389 billion (approximately RMB21.853 billion), an increase of 2% year-on-year; net sales of toiletry products were US$1.481 billion (approximately RMB9.550 billion), up 3% year-on-year; and net sales of health and wellness products were US$2.662 billion (approximately RMB17.165 billion), up 13% year-on-year Net sales of textiles and home care products increased by 7% year-on-year to US$6,699 million (approximately RMB43,196 million), while net sales of infant, women's and home care products increased by 7% to US$4,935 million (approximately RMB31,821 million).
Part of the reason for the rise in P&G profits was driven by higher pricing. Last year, Procter & Gamble announced price increases for all 10 products. The company also plans to raise the price of home care products in June this year and women's care and oral care products in July.
Driven by a variety of global instabilities, P&G's driving significant growth in sales and profits is a considerable feat. Andre Schulten, P&G's chief financial officer, said: "Inflationary cost pressures are widespread and will continue to rise, with little sign of easing in the short term, which has led to higher consumer prices for packaging materials and other categories." As the company has raised prices in recent months to offset those spending, consumer responses so far have been 20-30% better than historical data would have predicted. ”
He noted that P&G has reduced its operations in some non-essential categories and increased its investment in daily necessities, health products and hygiene. "Even under cost pressures, we continue to invest in the strengths of each category."
P&G raised its full-year sales forecast but maintained its profit forecast. P&G said it expects total sales to increase 4% to 5% year-over-year in fiscal 2022, organic sales to increase 6% to 7% year-over-year, and core earnings per share in fiscal 2022 to increase 3% to 6% year-on-year.
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The effects of the Ukrainian-Russian War continued
Increase the proportion of sales in the Indian market
Due to supply chain issues and the impact of the war in Ukraine on energy costs, P&G is planning to deal with persistent inflationary pressures.
P&G said the impact of the Ukraine crisis on the company's retail customers, suppliers and distributors will be the main factor in the company's decision-making. Before Russia's special military operations against Ukraine, Russian and Ukrainian operations accounted for 1.5-2% of the company's global profits.
Last month, P&G announced a moratorium on investment in its Russian operations and downsizing the list of products exported to Russia.
While the global territory is shrinking, in order to increase the construction of emerging consumer markets, P&G has set its sights on India.
Currently, P&G's three entities in India sell products ranging from detergents and shampoos to razors and sanitary napkins, with total revenues of less than $2 billion or less than 3 percent of total sales. Over the past few years, Procter & Gamble India has invested more than Rs 200 crore in India, mainly to establish a production division to reduce its reliance on more expensive imports.
At the same time, P&G announced the promotion of LV Vaidyanathan as CEO of India, effective July 1, 2022. According to public information, Vaidyanathan has more than 26 years of experience in the industry, having worked in different departments of P&G, and joined the company in 1996 and is currently a senior vice president and managing director of Procter & Gamble Indonesia.