P&G backed its expectations for total sales growth in the low-double digits for the quarter. The company says its forecast includes estimated price and mix impacts of minus two to three per cent, "mainly as a result of rapid developing market growth".
Historically P&G has tend to increase its forecasts during mid-quarter update but this is now the second consecutive quarter without positive upgrades.
Complaining of weak North American and Western European market, personal care companies are relying more and more on the fast growing developing markets, particularly Central and Eastern Europe and Asia, to push their sales. As a result of the increasing incomes in the developing markets, large companies see great sales growth potential and are ready to sacrifice a part of the profit by cutting prices to get bigger market share.
"The strong top-line momentum continues to be led by exceptional developing market growth," says P&G.
Most leading cosmetics companies have reported impressive growth in developing markets in recent months. "In a few years, these markets could generate the company's largest sales," said recently Lindsay Owen-Jones, L'oréal's CEO.
P&G expects organic sales growth, which excludes the estimated impacts of acquisitions and divestitures as well as foreign exchange, in the range of four to six per cent for the quarter. Organic volume growth is expected in the high-single digit range.
In the year ending June 2003, P&G had a total turnover of $43.37 billion, compared to $40.23 billion for the previous 12 month period.