The Procter & Gamble Company is hiking its ad spend 3.1% as it reports solid net sales growth for Q3.
The manufacturer of Tide, Pampers, Olay and Crest is reporting fiscal third-quarter net income of $3.4 billion, up from $3.36 billion a year earlier, driven by strength in health and homecare products. Net sales are up 4% to $20.1 billion as prices spiked 10% across its portfolio.
Selling, general and administrative expense (SG&A) as a percentage of sales increased 100 basis points in comparison to a year ago, as a result of 310 basis points of marketing investments.
In this morning’s earnings call, P&G CFO Andre Schulten says the company remains “fully invested in its business,” and is focusing on its digital acumen to build superiority, reduce costs and heighten value.
Schulten says it can generate $400-500 million per year from media programmatic savings, and that it is expecting a “steady” level of media spend.
P&G’s ad spending is becoming more efficient due to its ability to coordinate in-house scheduling and media buys, and increased digital capability. These factors have boosted ROI of every dollar it can spend, according to Schulten.
The company says it remains committed to its strategic focus on its product portfolio of daily-use categories.
The CPG’s healthcare segment saw organic sales increase 9% versus a year ago. Oral care organic sales rose by high single digits due to increased pricing. Personal healthcare, which includes Vicks and Pepto Bismol brands, saw organic sales boosted by double digits.
P&G’s fabric and homecare segment, which includes Gain, Bounce and Swiffer, saw organic sales increase 9% compared to last year. Fabric care organic sales rose by high single digits due to increased pricing, partially offset by volume declines primarily in Europe. Homecare organic sales increased by double digits.
P&G’s grooming business, however, which includes brands such as Gillette and Venus razors, saw a 1% decline in volume.
The company says it is cautiously optimistic in a high-volatility environment, and expects sustained cost and foreign exchange pressures.
