Beauty care ensures strong Q2 for P&G

Procter & Gamble announced robust sales and profit growth for
the second quarter, exceeding its long-term targets. The strong
results were primarily driven by P&G's good performance in
beauty care and growth in developing markets. P&G also
benefited from its acquisitions of Wella and Clairol, which shifted
the business portfolio to beauty care products.

Net sales for the quarter increased 19 per cent to $12.962 billion, while operating profit rose 16 per cent to $2.139 billion. Most impressive was the beauty care sector, which saw net sales rocket by 43 percent to $4.41 billion - though excluding Wella, this was a more measured increase of 13 per cent.

P&G's strategy to develop and invest in faster-growing, higher-margin, more asset-efficient businesses with global leadership potential such as beauty care, is obviously already paying off.

After the company's acquisition of Clairol in 2001 and Wella in 2003, beauty care became the largest business at the company with sales worth more then one third of the total. This is in comparison to 2000, when beauty care was worth less then one fifth of the sales.

"This is the third consecutive year of broad-based strength across businesses and geographies, demonstrating the power of focused strategies and the sustained benefits of the systemic and structural changes we made over the past several years"​, said P&G's chairman of the board, president and CEO A. G. Lafley.

P&G's results contrast to those of its competitor Unilever. Only a week ago, the Anglo-Dutch consumer goods group, which has been focusing on food industry acquisitions, including Best Foods and Slimfast, announced disappointing results for the second quarter. According to the company report, "market conditions weakened further in the quarter with price declines in both home and personal care"​.

"It has been a tough quarter both in terms of the trading environment in some of our key markets and because of the specific portfolio issues we are dealing with"​, said Unilever's financial director Rudy Markham.

Conversely, all of P&G's business units, regions and each of the company's top 14 brands posted volume growth on the quarter and fiscal year. And it will continue to focus on these brands.

"We'll concentrate on our billion-dollar and soon-to-be billion-dollar brands, and on our top customers in our top 10 countries"​, said Lafley, continuing the policy the company has been following since 2000 when he was appointed.

The company will also be focusing on finding solutions for developing markets - China, for example, is now P&G's sixth largest market - up from tenth just three years ago.

"We expect growth in the coming decade to come from a balanced mix of developed and developing markets. We'll win in our high-priority developing markets by tailoring low-income offerings in core P&G categories"​, said Lafley when he took over leadership - a strategy which has obviously worked.