Procter & Gamble faces further rise in costs

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Procter & Gamble has seen its sales go up, but profit go down slightly in the first quarter of its broken financial year. The FMCG giant again warns of rising raw materials prices.

 

Increased demand for premium

In the past three months, Procter & Gamble achieved a sales rise of 5 % to 20.3 billion dollars (17.5 billion euros). On an organic basis, revenues increased by 4 %, driven by a 2 % increase in volume, a 1 % increase in price and a 1 % positive product mix effect. Especially the Healthcare division, including Oral-B, and the premium products performed above average.

 

However, operating profit fell 5 % to 5.0 billion dollars (4.3 billion euros) due to higher raw material and transportation costs. That is not unexpected: in August, Procter & Gamble already had warned that profits might come under pressure due to cost inflation.

 

"In a challenging operating and cost environment, we delivered solid results in our first quarter of the fiscal year", CEO David Taylor said in presenting the results. P&G therefore, maintains its growth forecast of 2-4 % for the full year. However, the company expects that raw materials and transportation costs will continue to increase and estimates the total impact of this at about 2 billion euros. Three months ago, the company was still expecting an additional cost of 1.5 billion euros.