P&G ups ad expenses as profit hit by slowing economy

Ad & sales promo expense up 25.6 percent, Net profit fell 5 percent

BENGALURU: FMCG player Procter & Gamble Hygiene and Health Care Ltd (P&G) reported 7.6 percent year-on-year (y-o-y) growth in revenue from operations for the quarter ended 30 September 2019 (Q1 2020, quarter or period under review) as compared to the corresponding year ago quarter Q1 2019. P&G’s financial year is between 1 July and 30 June, hence the quarter ended September 30, 2019 is Q1 2020 in the case of P&G.

During a period in which the world is witnessing economic sluggishness, the company increased its advertising and sales promo spends for the quarter under review by 25.6 percent y-o-y to Rs 104.46 crore from Rs 83.2 crore. The company reported 5 percent y-o-y decline in Q1 2020 in Net profit after tax (PAT) at Rs 136.84 crore as compared to Rs 144.11 crore. EBITDA for the quarter under review declined 5.4 percent y-o-y to Rs 173.55 crore (20.4 percent of operating review) as compared to Rs 183.53 crore (20.2 percent of operating review).

P&G revenue from operations for Q1 2020 increased to Rs 852.14 crore from Rs 791.80 crore in Q1 2019. Total Income including other income increased 5.9 percent y-o-y in Q1 2020 to Rs 863.16 from Rs 815.36 crore.

Let us look at the other numbers reported by P&G

Total Expense in Q1 2020 increased 14.6 percent y-o-y to Rs 681.78 crore from Rs 594.73 crore. Expenses towards costs of raw materials and packaging materials increased 28.5 percent y-o-y to Rs 334.88 crore in Q1 2020 from Rs 260.51 crore. Purchase of traded goods declined 89.2 percent y-o-y to Rs 11.27 crore from Rs 104.27 crore.

Employee Benefits Expense in Q1 2020 increased 17.5 percent y-o-y to Rs 42.07 crore from Rs 35.81 crore. Finance costs declined 14.3 percent to Rs 0.36 crore from Rs 0.42 crore. Other Expense increased 25.6 percent y-o-y to Rs 185.91 crore from Rs 148.04 crore.

Company speak

The company says in a press release that in a challenging market environment, its Feminine Care business registered strong double-digit growth in the quarter, while its Health Care business grew ahead of the market.

P&G managing director Madhusudan Gopalan said, “In a challenging macro-economic environment our focus on raising the bar on superiority, improving

productivity, and strengthening the organisation culture has enabled us to deliver sustained growth during the first quarter. We will continue to remain focused on these strategies in line with our aim to drive balanced sales and profit growth.”

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