Procter & Gamble shares spike in surprise profits boost

Rising profits for the first quarter at consumer goods group Procter & Gamble (P&G) took the market by surprise today, leading its share price to rise almost eight per cent.

The giant behind brands such as Pampers, Bounty and Pantene reported organic sales growth of four per cent in the last three months, its best results in five years.

Sales in its beauty business jumped five per cent, driven by premium skincare brands such as Olay and SK-II. Additionally its grooming business, which includes Gillette and Braun, surged five per cent in volume.

The news is a welcome boost for P&G, whose stock has fallen 13 per cent this year and underperformed the broader consumer products index.

Read more: Tesco reveals budget supermarket chain, Jack's

Ongoing competition from store-owned budget brands has proved troublesome for P&G in recent years. This is exemplified by recent growth in that industry, including Tesco launching a budget supermarket chain Jack's to rival that of Aldi and Lidl.

Net sales at the company rose to $16.69bn (£12.8bn) from $16.65bn last quarter, trouncing analyst estimates which had predicted overall sales to fall to $16.46bn.

However the company reiterated warnings that it plans to increase prices on several products in its US home care, oral care and personal care divisions, which include brands such as Oral-B, Tide and Febreze.

It will also raise prices in developing markets, such as Argentina, Russia and Turkey, to make up for the impact of the strong dollar on foreign exchange headwins.

Chief financial officer Jon Moeller told reporters that "in less than the three months since our last earnings release, the foreign exchange headwinds on earnings increased by $400m after tax."