Procter & Gamble recently announced its fourth quarter results and it is not positive for them, which they are witnessing after a decade a situation like this. The sales of P&G were intense by price cut but it didn’t work out and now the company has announced they would increase prices for some of their products.
With the results of P&G’s fourth quarter, the results show company didn’t stand on the profit expectation since sales were low and for the next year, it is forecasted to be a moderate growth considering the current situation in North America. To make up to the profit expectation, P&G is likely to increase the North America prices for paper-based products like Bounty paper towels, Pampers diapers, Charmin toilet paper, and Puffs tissue. All the increase in these products would lie between on an average of 4% or 5%. P&G witnessed sales of USD 16.05 billion this year compared to the last year of USD 16.55 billion, which is a total loss of 50 million. The primary reason behind this lag is from some of the products in the company’s product line where sales increased but lower pricing has wiped out the company’s profit.
The executives of P&G have shown concern regarding the price rise but they are optimistic and believe it will continue to grow market share. The sales turnover from its organic sales which excludes the impact from acquisition, divestitures, and foreign exchange would like to increase by 2% to 3% in the next fiscal year, this same target was set last year but failed to achieve it in North America. Now compare this scenario to the P&G’s China market which is their second largest market after North America has shown a great result in terms of organic sales, which rise up to 10% compared to the last year’s 7%. P&G cited that rising shipping cost cuts the gross margin of the company by 1.1% in the fourth quarter which is almost equal to USD 180 million of profit impact.