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Will Procter & Gamble’s Organic Sales Continue to Improve?

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Higher pricing to drive organic sales

We expect Procter & Gamble (PG) to sustain the momentum in its organic sales, reflecting higher pricing across all its business segments. A favorable mix is also likely to support its underlying sales.

The company’s Beauty segment’s organic sales are expected to benefit from higher volumes and pricing. Within Beauty, the skincare and personal care categories are expected to sustain momentum and mark healthy growth driven by premium innovations and favorable product mixes. Meanwhile, organic sales in the Health Care and Fabric and Home Care segments are also expected to benefit from higher pricing and innovations.

Higher pricing is expected to support sales in the Grooming and Baby Care segments, but heightened competition is likely to offset the benefits.

Overall, Procter & Gamble’s organic sales are expected to rise in the coming quarters. However, its net sales are likely to remain muted, as benefits of higher organic sales are likely to be offset by currency volatility.

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What to expect from PG’s peers

We expect adverse currency rates to take a toll on the top lines of other major consumer packaged goods manufacturers. Colgate-Palmolive’s (CL) top line is expected to decline in the coming quarters, reflecting unfavorable currency rates. However, higher pricing is expected to support its organic sales.

Kimberly-Clark’s (KMB) top line is also expected to remain weak. However, its organic sales are expected to sustain their momentum.

Church & Dwight (CHD) and the Clorox Company (CLX) are expected to report improvements in both their net and organic sales driven by an increase in volumes and pricing. Innovation-led products are expected to support the top line growth of these companies. However, adverse currency rates are like to remain a drag on their top line growth rates.

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