uploads///Q baby care overview

What Happened to Procter & Gamble’s Baby Care Segment in Fiscal 3Q16?


May. 6 2016, Updated 9:07 a.m. ET

3Q16 Baby Care revenue highlights

Net revenue from Procter & Gamble’s (PG), or P&G’s, Baby, Feminine, and Family Care segment came in at $4.5 billion in fiscal 3Q16. This was 7.9% lower than in fiscal 3Q15. Organic sales for this segment were unchanged, however, as compared to one year ago, as pricing benefits were offset by lower organic volume.

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Declining organic sales

Baby Care organic sales declined in fiscal 3Q16. Pampers growth in the US was offset by challenges from Luvs, while softness in international markets led to increased competition by Kimberly-Clark’s (KMB) Huggies and lower volumes. However, Pampers’ value share was up by more than one point over fiscal 3Q15.

Feminine care organic sales grew by low single digits compared to one year ago, due to strong share growth in the US and pricing in developing markets. Family Care organic sales were unchanged. Growth in the US was offset by declines in Mexico.

Meanwhile, changing consumer habits have increased competition around the globe. Like P&G, Clorox (CLX) and Unilever (UL) focus on innovation and new technology to improve consumer value.

Increasing equity-brand building

The company is increasing its equity-building advertising, strengthening in-store programs, and improving product and packing for Luvs brand for the next quarter. This is meant to address share declines following Kimberly-Clark’s significant price reduction.

The company is also improving point-of-market entry programs to deliver higher awareness and trial of Pampers among new moms. P&G also aims to accelerate premium innovation on taped and pull-up diapers to restore its competitiveness at the top end of the market.

Shift to profitable products

P&G is planning to simplify and reduce its number of agency relationships. The company plans to focus on upgrading agency capability to improve creative quality and communication effectiveness at a lower cost. For example, P&G is shifting focus from unprofitable, low-tier products to the more profitable, premium-tier products in Mexico.

Notably, PG made up 5.3% the First Trust Morningstar Dividend Leaders Index Fund ETF (FDL) as of April 30, 2016.

Now let’s discuss P&G’s 3Q16 margins and recent stock price movement.


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