(Bloomberg) -- Procter & Gamble Co. posted the biggest increase in five years in a key sales measure last quarter, helped by gains in products like skin cream and health-care brands.
The surprise growth sent the shares up as much as 5.7 percent in early U.S. trading Friday. Organic sales, which exclude items like acquisitions and currency effects, rose 4 percent, P&G said, more than double the gain projected by analysts.
In an environment when growth is hard to come by for big consumer products companies, the performance was unexpectedly strong. P&G said the U.S. drove much of the gain. The Cincinnati-based maker of Bounty and Pampers called out Olay -- a long-struggling brand -- and the new SK-II luxury skin cream, popular in Asia, as key drivers.
It was a “very solid quarter on which we need to build,” Chief Financial Officer Jon Moeller said on a call with reporters. The company said it gained market share in the first quarter which ended Sept. 30, and that eight out of 10 global categories either increased or maintained market share.
The shares rose as high as $84.85 in premarket trading. They had lost 13 percent this year through Thursday’s close, compared with the 3.6 percent gain in the S&P 500 Index.
P&G, like many traditional consumer-products companies, has been hurt by heightened competition, including from upstart businesses. Higher commodity costs and unfavorable foreign-exchange trends are still taking a toll on the company’s profitability. Gross margin fell to 49.2 percent from 50.3 percent a year earlier.
Despite the gains last quarter, the company maintained its full-year organic sales and profit forecasts. It said price increases that are going into effect may have an impact on volume and the company is more comfortable maintaining its outlook for now.
--With assistance from Karen Lin (Bloomberg Global Data).
To contact the reporter on this story: Lauren Coleman-Lochner in New York at llochner@bloomberg.net
To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Lisa Wolfson, Cecile Daurat
©2018 Bloomberg L.P.
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