Less than two weeks after declaring victory in a proxy war, Procter & Gamble’s results show the company is making progress in some areas - but robust sales growth remains elusive.
Profit exceeded forecasts and sales met expectations last quarter. Nonetheless, the company reported weakness in the grooming and baby, feminine and family care divisions. Billionaire investor Nelson Peltz has said that P&G is being held back by an unwieldy structure and trails peers in performance and innovation, while the company argues a turnaround is taking hold.
“Overall we believe the result is disappointing relative to expectations, with sales growth most notable,” Mark Astrachan, an analyst at Stifel Financial, wrote in a note Friday.
Profit was $1.09 a share, excluding some items, the Cincinnati-based company said Friday, topping the consensus estimate of $1.08. Overall organic sales rose just 1%. Growth in the beauty, health care and fabric and home care segments offset declines in the other areas.
Shares of the maker of Tide, Pantene and Pampers fell as much as 1.9% to $89.89 in early New York trading.
Tougher Market
The growth of years past has been elusive for many consumer-products companies. Pressure from private-label brands and retailers’ push for cost cuts have weighed on manufacturers, Andrea Teixeira, an analyst at JPMorgan Chase & Co., said in a note this week. P&G’s results in particular are under scrutiny after Peltz highlighted market share losses and sales performance, she said.
P&G says that Peltz’s criticisms are outdated and the company has acknowledged its problems and is targeting them.
After three months of tit-for-tat press releases from the two sides, preliminary results showed that P&G prevailed earlier this month in denying Peltz a seat - but by a margin of less than 1%. Peltz has challenged the results and has argued that he deserves a board seat regardless of the actual count.
Chief Executive Officer David Taylor said P&G will accelerate sales growth and improve margins in coming quarters. The company sees the latest quarter as the toughest comparison period for fiscal 2018.
“We delivered organic sales growth in a decelerating global market and against a relatively strong base period,” he said in a statement. “Market share trends continue to improve, with more of our top brands and countries holding or growing share.”
The company maintained its guidance of organic sales growth in a range of 2 to 3% for fiscal 2018.
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