CINCINNATI -- Procter & Gamble Co. exceeded analyst expectations on profits and organic sales growth in the last three months of 2015, giving new CEO David Taylor some good news to share in his first quarter in charge.
P&G posted net income of $3.21 billion, or $1.12 per share, on revenue of $16.9 billion for the second quarter of its fiscal year. Profits were up 35 percent from a year ago, while sales declined 9 percent.
P&G exceeded analyst expectations on two key metrics. Core earnings per share, which excludes the impact of divestitures, stood at $1.04, above the $0.98 expected by Wall Street analysts. Organic sales, which exclude the impact of currency swings, rose 2 percent, double what analysts predicted.
“We are encouraged by our return to organic sales growth in the quarter,” Taylor said in a press release. “With the top-line improvement and continued cost reduction, we delivered solid core operating income and EPS growth in the face of significant macro-economic and geopolitical headwinds.”
P&G shares were up 2 percent to $78.44 in early trading Tuesday.
The maker of Tide detergent, Pampers diapers and Gillette razors is pursing a multi-year strategy of cost reductions and brand divestitures, freeing up cash to invest in new growth initiatives. Tuesday's quarterly results included evidence that the strategy is working. Organic sales in the U.S. went from minus 2 percent last quarter to growth of 3 percent.
Chief Financial Officer Jon Moeller said new product innovations are having a positive impact on several products in the U.S., including Tide Pods, Pampers with “Extra Absorb Channels” and a new “ProShield” lubrication feature on Gillette razors.
As it adopts the same approach in other parts of the globe, P&G is seeing positive results.
“We went from losing money in India to triple-digit profits,” Moeller told analysts Tuesday. “The strategic part of the business, the part that we are maintaining, grew a healthy 10 percent. Sales in the portion of the business we are fixing or exiting, which is about 15 percent of the portfolio, we’re down 35 percent.”
But growth has yet to return to P&G’s second largest market: China.
Moeller said CEO David Taylor spent a week in China last week with P&G’s research and development leaders to bring more premium-priced products to market in laundry, toothpaste, shampoo and feminine care.
“Our view on China is an opportunistic one, not a pessimistic one,” Moeller said. “We really think there is significant continued opportunity there, both top and bottom line.”