By Ananya Mariam Rajesh and Jessica DiNapoli
(Reuters) -Procter & Gamble beat quarterly estimates for sales and profit on Wednesday, as demand for its dish soaps and toilet paper grew in the United States, while the China market showed signs of recovery after a few rough quarters.
Shares of P&G, considered a bellwether for the consumer goods sector, rose nearly 3%.
“We see a relatively stable environment, which we expect to continue going into second half. And we are investing in strong innovation to benefit from that stable consumer environment in the US,” CFO Andre Schulten said on a post-earnings call.
P&G’s sales in North America grew 4% in the quarter, as the company doubled down on investments in new products, launching products such as Olay Melts face soap pads and Luvs diaper, to lure back customers who had moved away due to repeated price hikes in the last two years.
Christian Greiner, senior Portfolio Manager at F/m Investments, which has a stake in P&G, said he was a bit surprised that pricing was flat across some of the verticals but volumes grew.
“It lets (you) believe that these next couple quarters, you could really see some momentum.”
P&G reported a 2% rise in overall organic volumes in the quarter, while the average prices across its product categories remained flat. The company had previously relied on pricing for sales growth after a pandemic-led slump.
Now, more new products are in the pipeline, executives said on a conference call with investors.
P&G CEO Jon Moeller said new items including a low-cost Oral-B electric toothbrush, Crest whitening toothpaste and Zevo insect repellent will help drive sales for the rest of the fiscal year.
But as the company develops more products, there would be “modest amounts of pricing (rise in price) as we move forward,” Moeller said.
P&G, however, kept its annual forecast unchanged, as China still remains a dark spot. Second-quarter sales in China, one of the company’s largest markets, fell 3%, although improving from 15% and 9% declines in the previous two quarters.
Sales of its Japanese beauty brand SK-II in China grew 5% in the second quarter after several quarters of declines due to anti-Japanese sentiment. The company has started to see concerns ease related to demand for the brand.
Moeller said although the brand has seen growth in China, overall consumption trends in the country remain concerning as “the broad swath of society is not confident and is still struggling… it will take some time still to get to dependable growth in China.”
The company’s quarterly net sales rose 2.1% to $21.88 billion, compared with analysts’ expectations of $21.54 billion, according to LSEG data.
It earned a profit of $1.88 per share, beating estimates of $1.86.
(Reporting by Ananya Mariam Rajesh in Bengaluru and Jessica DiNapoli in New York; Editing by Shinjini Ganguli)
