P&G posts drop in Q3 net sales due to forex pressures, loss in volume

Procter & Gamble (P&G) has reported net sales of $19.8 billion (Rs 1,641,900 crore) for the third quarter of fiscal year 2025, a 2% decrease compared to the same period last year. 

This decline was largely due to foreign exchange headwinds, which negatively impacted sales by approximately 3%. However, the company showed resilience with organic sales growth of 1%, bolstered by higher pricing across most segments.

The company’s performance was varied across its diverse product segments, with certain areas achieving growth despite the macroeconomic challenges. 

Beauty Segment- Organic sales in P&G’s beauty division increased by 2% year-over-year. The positive growth was driven by higher pricing, particularly in Latin America and North America, and a favorable premium product mix. However, this was partially offset by volume declines, especially in Greater China. Skin Care, in particular, experienced a low-single-digit decline in organic sales due to volume losses and unfavorable geographic mix.

Grooming Segment- The grooming business delivered 3% organic sales growth, supported by both volume growth and price hikes, particularly in Latin America, Europe, and North America. The segment, however, saw a 2% decline in net sales due to foreign exchange impacts.

Health Care Segment- Organic sales in the healthcare division increased by 4% year-over-year, driven by solid growth in Personal Health Care due to volume expansion and higher prices. Oral Care, however, faced a modest increase, with premium product innovations helping offset some volume losses.

Fabric and Home Care Segment- P&G’s Fabric and Home Care segment saw organic sales remain unchanged year-over-year. While Fabric Care saw no growth, Home Care posted a low-single-digit decline due to volume decreases. However, the premium product mix had a positive impact.

Baby, Feminine & Family Care- This segment posted the sharpest decline, with organic sales falling by 1%. Baby Care experienced modest declines in volume, though favorable geographic and product mix helped cushion the impact. Feminine Care remained flat, while Family Care experienced volume reductions and unfavorable product mix, leading to a low-single-digit decline.

P&G continues to navigate a complex environment marked by inflationary pressures, foreign exchange volatility, and shifting consumer behavior. Despite a 1% overall volume decline for the quarter, the company remains confident in its strategy, with pricing initiatives providing a stabilizing effect, as per their press release.

Looking ahead, the company has revised its full-year expectations for fiscal 2025. P&G expects flat overall sales for the fiscal year, with organic sales growth projected to be approximately 2% compared to the prior year. The company also continues to forecast a commodity cost headwind of approximately USD 200 million (Rs 16,660 crore) after tax, which may put additional pressure on margins.

"We continue to execute well in a challenging environment," said Jon Moeller, CEO of P&G. "While foreign exchange pressures and softening volumes in certain regions impacted the top line, our ability to drive organic sales growth demonstrates the strength of our brands and the resilience of our business model. Our focus on innovation, premium products, and effective pricing strategies continues to deliver results even in uncertain times."

Moeller also expressed confidence in P&G’s long-term growth trajectory, emphasizing the company’s continued investment in innovation and its ability to navigate fluctuating commodity costs.

As P&G enters the final quarter of fiscal 2025, the company claims to remain focused on achieving its revised sales and profitability targets. With a strong portfolio of brands and a commitment to operational excellence, P&G aims to weather ongoing market challenges while delivering steady, long-term growth.