P&G’s sales increase in Q1

Procter & Gamble says rising prices has helped increase sales in the first quarter of the year.

Net sales increased 9% to $21.9bn (£13.6bn), while organic sales, which exclude the impact of acquisitions, asset sales and currencies, increased 4%, driven by “broad based price increases”.

P&G chairman Bob MacDonald says the company has made a “good start” to the year and expects sales to increase between three and 6% in the coming year.

The company is two thirds of the way through its plan to increase product prices to offset higher commodity costs.

However, increasing commodity costs and marketing has continued to impact P&G’s margins, but it says its strategy to increase prices will help position the company for future growth.

Operating margin at the FMCG firm, which owns brand including Gillette, Pampers and Olay, fell 2.6% to 19.8% of net sales in the three months to the end of September, as costs continue to increase faster than price rises, and high operating costs.

P&G increased marketing costs around 0.2% to support innovation and expansion programmes.

MacDonald adds: “We maintained strong top-line growth momentum in a difficult operating environment. We are well positioned – due to continued top-line strength, recently implemented price increases and our productivity improvement and cost savings efforts – to improve earnings growth as we progress through the fiscal year.”

Reckitt Benckiser warned of slowing growth earlier this week when it reported a 16% rise in revenue to £2.45bn for the three months end of September, its third quarter.

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