Procter & Gamble and Kimberly-Clark, two of the world's biggest household products makers, forecast strong sales gains in emerging markets, quelling investor fears that slowing growth in some countries would hurt their prospects.
P&G, the maker of Pampers nappies and Tide detergent, said that revenue rose 8 per cent in developing countries in its fiscal second quarter, but barely edged up in mature markets such as the US and Europe. It stuck to its 2014 sales and profit forecasts.
Kimberly-Clark reported similar gains in emerging markets, helped by strong growth in China, and gave an upbeat 2014 forecast.
However, P&G said a growing preference for shaggy styles is trimming razor sales. It even called out Movember, when participants grow moustaches to raise money for prostate cancer research. The event cut into grooming sales last quarter, chief financial officer Jon Moeller said on an earnings call.
The focus on emerging markets comes as fears about the wellbeing of those markets triggered a broad selloff yesterday.
However, earlier this week, rival Unilever too said it would stick to its developing markets growth strategy as it reported 2013 results were boosted by a fourth-quarter recovery in sales in the segment.
“The emerging markets have become increasingly volatile,” said Ali Dibadj, an analyst with Sanford C Bernstein & Co. “People say emerging markets have slowed, but they’re still doing well.”
Executives at both companies said in conference calls with analysts they were concerned about currencies in both Argentina and Venezuela.
The growth in emerging markets was one reason P&G reported a decline of 0.9 per centage point in its profit margins. The company is building up its presence in the developing segment. And the costs are worth paying, said one longtime investor.Kimberly-Clark reported organic sales rose 5 per cent. – (Reuters/Bloomberg)
