Consistent with the company's guid- ance for the quarter, organic sales were up 2% on price increases and positive product mix. Net sales were 3% below the year-ago quarter at $20.4 billion primarily due to unfavorable foreign exchange and lower volume. Net earnings were up 53% to $5 billion due to the gain from the Folgers transaction.
"As expected, this was a particular- ly challenging quarter," said chairman of the board and CEO A.G. Lafley. "We expect the environment will remain difficult and highly volatile—at least in the near term. We are focused on the fundamentals that are critical to suc- cess in our business. We will continue to build brands that deliver better value for consumers by leading innova- tion and managing cost and productiv- ity programs with discipline. Our efforts in these areas give me confi- dence that P&G will continue to grow profitably and generate attractive returns for shareholders over the long-term."
In the baby care and family care sectors, net sales increased 3% during the quarter to $3.5 billion on 1% vol- ume growth. Price increases to recover commodity costs contributed 7% to sales growth. Unfavorable foreign exchange reduced net sales by 4%. Product mix from the disproportionate growth in developing regions and a shift toward larger pack counts nega- tively impacted net sales by 1%. Organic sales were up 7% for the quar- ter. Volume in baby care increased in the low single-digits due to strong growth of Pampers in developing regions.
For the 2009 fiscal year, P&G expects organic sales to grow by 2-5%. The combination of pricing and prod- uct mix is expected to impact sales growth by a positive 4-5%. Organic vol- ume is expected to be flat to down 2%. Foreign exchange remains highly volatile and is expected to reduce sales by about 5%. The net impact of acqui- sitions and divestitures is estimated to be flat to -1%. Total sales growth is expected to be flat to -4%.
For the January-March quarter, organic sales are expected to grow 2-5%. The combination of pricing and product mix is expected to contribute between 5-7% to sales growth. Organic volume is expected to decline 2-3%. Foreign exchange is estimated to reduce net sales by high single-digits, and the net impact of acquisitions and divestitures is expected to be neutral to net sales growth for the quarter. Total sales are expected to be down 2-7%.