P&G eyes overall sales growth despite China weakness

Procter & Gamble projected revenue growth over the next 12 months as the consumer products giant reported mixed results Tuesday, with solid US and European sales offset by continued weakness in China.

While some companies have pointed to recent consumer deterioration in the US and Europe, "we generally don't see the dynamic that some are describing," said Jon Moeller, chief executive of the company behind Tide detergent, Pampers diapers and Crest toothpaste.

Moeller cited a streak of higher volumes notched by P&G in the US and Europe over the last several quarters.

At the same time, executives offered a downcast outlook on China in the near-term, signaling at least another six months of struggle in a region that experienced an eight percent sales drop in the most recent quarter.

P&G, which also acknowledged lingering weakness in the Middle East, reported a seven percent dip in profits to $3.1 billion for the quarter ending June 30. Revenues were essentially fat at $20.5 billion, a bit below analyst forecasts.

The consumer products heavyweight is projecting fiscal 2025 sales growth of between two and four percent.

Part of P&G's struggle in China is brand specific, with sales of its SK-II premium Japanese skin care products having been depressed for months due to anti-Japan sentiment.

Chief financial officer Andre Schulten also pointed to a shift in China retail dynamics that has accelerated due to the pandemic.

Over 30 years P&G had developed a heavily brick-and-mortar footprint in the country, and now faces competition from digital retail sites.

"We're taking our time to transition our portfolio to ensure we end up with the right balance" between brick-and-mortar and digital channels, Schulten said.

While P&G is bullish that China can return to a growth market, executives do not expect double-digit growth to come back.

"We don't expect to return to the growth rates we saw pre-Covid," Schulten said, predicting mid-single digit growth "over time."