P&G has closed its third quarter with declines in both sales and earnings despite a 1% increase in organic sales. The slight increase in organic sales reflects a 6% net benefit from pricing and mix, which offset lower volumes. During the quarter, sales fell 8% to $18.4 billion, below the $18.9 billion analysts had forecast, including a 9% hit from the U.S. dollar. The company attributes the sales decline to a 9% unfavorable foreign exchange impact.
Volume declined 5% for the quarter driven primarily by market contractions, continued trade inventory reductions and volume share softness following price increases in certain categories. These impacts were most acute across the Central and Eastern Europe/Middle East/Africa (CEEMEA) region, where price increases were necessary to maintain the structural economics of businesses due to the devaluation of local currencies, which increased the cost of dollar-denominated commodities. In total, price increases added 7% to net sales and product mix had a -1% impact on net sales.
During the third quarter, ended March 31, P&G earnings fell to $2.61 billion from $2.7 billion when there were more shares outstanding. Meanwhile, P&G posted a 4% drop in quarterly profit as consumers switched to less expensive items.