Yahoo Finance What Dragged down Procter & Gamble’s Healthcare Organic Sales in Fiscal 3Q16?
Inside Procter & Gamble's Soaring Operating Margin in Fiscal 3Q16
Revenue declines in fiscal 3Q16
Procter & Gamble’s (PG), or P&G’s, Healthcare segment’s organic sales decreased by 1% in fiscal 3Q16. Higher pricing in both oral care and personal care was offset by lower volume primarily related to a weak cough and cold season.
Net revenues for fiscal 3Q16 declined by 7.1% to $1.8 billion, as compared to fiscal 3Q15, for the Healthcare segment. Oral care organic growth and market sales fell flat. The strong growth from power toothbrushes was offset by customer inventory reductions in North America.
Notably, PG made up 6.2% of the iShares Global Consumer Staples ETF (KXI) as of April 30, 2016.
Organic sales growth
In developing markets, organic sales growth were flat as strong growth in China, Brazil, and Mexico was offset by the loss of finished product sales to P&G’s de-consolidated subsidiaries in Venezuela. Additionally, developing market sales declined due to lower volumes, which were driven by competition from Colgate-Palmolive (CL) and Unilever (UL), especially in Asia but in many local and regional competitors. (To learn more about Colgate-Palmolive’s dominance in toothpaste, please read A Must-Know Business Overview of Colgate-Palmolive .)
Personal care organic sales declined by mid-single digits due to lower sales of lower sales of Prilosec was due to higher competition from bigger healthcare companies like Pfizer (PFE) in developed markets.
Increasing distribution this quarter
The company launched Oral-B Super Premium toothpaste in more than 700 stores last quarter. This increased the share of this toothpaste to ~5% in those outlets. P&G’s focus is to continue with triple distribution of Oral-B Super Premium toothpaste by this quarter. P&G is also planning to import power toothbrushes to China to grow its base in emerging markets, which will benefit in profit growth and strong cash flow productivity.
According to a Kantar Brand Footprint report , Oral-B is among the top 100 brands on three continents to have a global reach. (The three continents are the US, Latin America, and Europe.)
Continue to the next part for our analysis of P&G’s Fabric Care and Home Care segment in fiscal 3Q16.
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