Price increases did not deter Procter & Gamble customers: the brand manufacturer started its new financial year with 7 % more sales, while volumes also increased.
Chinese disappointment
The increase in sales was almost entirely due to price increases, although there was also modest volume growth overall – especially in the United States and in the company’s European focus markets. However, there was a drop in organic sales in Greater China, as consumer confidence remains weak.
All ten product categories showed organic sales growth, while sales also increased in five of the seven regions, CFO Andre Schulten said in a call with investors. “We’ve seen 15 % organic sales growth in Europe focus markets, which is incredibly strong, a combination of 2 % volume growth and strong price/mix”, he boasted.
Fewer promotions
Consequently, Procter & Gamble is not planning more promotions or price cuts. On the contrary: in Europe, promotional pressure is even decreasing as consumers are said to remain “remarkably resilient” and they hardly change their buying behaviour. P&G even sees consumers climbing within its product portfolio, choosing more expensive brands.
The combination of price increases, lower raw material costs and a more stable supply chain ensured that gross margins recovered to 52 % last quarter. However, the benefits of the price increases are expected to diminish as the year progresses, while the Pantène producer expects consumers to spend more on energy and high interest rates this winter.
