Procter & Gamble Earnings Exceed Expectations
Published December 23, 2019
The rise of private label brands continues to challenge companies in the consumer packaged goods (CPG) industry to adapt in new ways. Private labels are produced under contract through a private retailer. By eliminating branded manufacturers, private label brands can offer an increasing number of products at more affordable prices than their branded counterparts.
Many would think the increasing popularity of private labels should be accompanied by losses for some of the biggest CPG brands. But despite predictions, Procter & Gamble (P&G), one of the largest multinational consumer packaged goods brands, continues to post excellent earning reports and outpace its competitors. The company’s strong Q3 numbers bode well for the greater CPG industry, proving that success is possible despite current market volatility.
A Brief History of Procter & Gamble
Founded October 31, 1837, P&G was opened in Cincinnati, OH, by a former soap and candle maker. Initially supplying soap and candles to soldiers during the American Civil War, the company’s product line soon expanded to include toothpaste, coffee, tea, and baking mixes, along with countless other health and wellness products. Today, the company is one of America’s leading national advertisers and recently reported revenue of over $17.09 billion this past July.
P&G’s Contributions to the Consumer Packaged Goods Industry
Growing exponentially since its humble beginnings, Procter & Gamble controls many of the largest health and wellness brands in the CPG and service industries. Including household names like Tide, Crest, Gillette, Charmin, and Febreze, P&G’s high-quality products continue to challenge barriers and inspire innovation across the industry.
Strong 2019 Quarter 3 Earnings Announced
Releasing their Q3 earnings report on October 15, 2019, Procter & Gamble continues to prosper despite increasing market volatility. Earnings per share were expected to reach $1.24 but came in at a reported $1.37, bringing in more than the expected $17.42 billion. In light of these positive results, P&G has increased its anticipated growth from 3-4 percent to 3-5 percent. The company also hopes to see a growth in core earnings from 4-10 percent, up from the 4-9 percent increase reported before the Q3 earnings were released.
Maintaining the Top and Bottom Line
Procter & Gamble’s exceptional Q3 results beat analysts’ expectations for both top and bottom-line growth. Despite the excitement surrounding their recent success, fears of a potential economic downturn have raised questions surrounding P&G’s sustainability. CFO Jon Moeller has stated that even if a recession does occur, Procter & Gamble’s near 60 percent international sales should ensure continued stability.
Outpacing the S&P 500
In addition to increasing loss prevention efforts and sustainability to help maintain their bottom line, P&G’s stock continues to outpace the S&P index. Rising 30 percent in 2019 and 37 percent total in the past year, the company’s market shares have consecutively improved for the past eight quarters. Given the current international climate—and taking currency changes, transport, and tariffs into consideration—P&G hopes to see a “modest net benefit” in the 2020 fiscal year.
Industry Implications for Other CPG Brands
Procter & Gamble’s Q3 results bode well for other CPG brands, showing that a return on investment is possible despite private label growth, increased international manufacturing, and market volatility. However, remaining relevant and successful in the quickly-changing consumer packaged goods industry doesn’t happen by accident. Continued growth requires the ability to predict—and stay ahead of—trends, the foundation to support organic growth, and the capacity to fill consumer needs at a maybe unprecedented rate.
Capitalizing on Trends
Making the most of CPG trends goes far beyond utilizing reusable or connective packaging. Beating trends requires a forward-thinking mindset and a willingness to adapt. Whether this means breaking into emerging industries, like the quickly-growing CBD market, or expanding your product or service offerings to appeal to a more extensive consumer base, staying ahead means staying on top.
Encouraging Organic Growth
Beauty, health care, fabric, and home care lines were P&G’s largest contributors to organic growth this past year. Cutting costs, raising product prices, and lower commodities costs all play a factor in this uptrend of improved organic sales growth. Play to your brand’s strengths and consider areas of potential improvement to ensure that growth remains the highest priority at your company.
Meeting Increased Needs
The consumer packaged goods industry is primed for growth, with some sectors predicted to see unprecedented increases. As consumer needs continue to grow and change, flexibility is the key to success. If your brand is not equipped—and prepared—to meet increasing needs (either in capacity or speed) conglomerates like P&G will be unstoppable.
Procter & Gamble’s continued growth does not need to be unique. If your brand is able to use the above tips to strengthen its foundation, your 2020 sales and outlook can look considerably brighter.
Exceed Expectations With INSITE
With increasing ecommerce and evolving consumer demands proving to be significant contributors to growth within the CPG industry, your brand must be ready to meet new needs. As a packaging automation company committed to leading the industry with streamlined simplicity, INSITE is equipped to help you grow with confidence. Contact us today to learn more about our innovative case erectors and case sealers.