P&G Greater China down 4% in FY2022

Abstract: Recently, P&G released the fiscal year 2022 (July 2021-June 2022) sales of $80.18 billion, up 5% year-on-year.

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According to CHAILEEDO, in addition to the release of the fiscal year 2022 data, the fourth quarter results were also announced one after another. The financial report shows that from April to June 2022, P&G's net sales were $19.51 billion, up 3% year-on-year and net profit attributable to the parent company was $3.05 billion, up 5% year-on-year.

P&G's businesses across all divisions also grew. Net sales of health care products grew the fastest, up 9 percent year-over-year to $10.8 billion. However, the beauty segment, which includes brands such as SK-II and OLAY, and men's grooming had the lowest growth, up only 2%. The earnings report explained that the slowdown in the beauty segment growth was mainly due to low single-digit growth in hair care products due to price increases, partially offset by a pandemic-related blockade in Greater China and lower sales due to reduced business in Russia.

The financial results show that P&G achieved 8% organic sales growth in the U.S. market in fiscal 2022. In stark contrast, P&G's organic sales in Greater China declined 4% year-over-year. Jon Moeller, P&G's president, and CEO said P&G's decline in China was heavily impacted by the pandemic outbreak in Shanghai. "The location of manufacturing operations had a significant impact on the ability to supply the market. We were severely impacted by some of the areas where production was shut down, like Shanghai, where we have production centers and significant contract manufacturers." He said when questioned by the media.

But P&G remains confident in the Chinese market. Andre Schulten, CFO of P&G, noted that the Chinese market offers P&G very attractive growth rates and value creation opportunities. It still is seeing progress as liquidity returns. As department stores reopen, capabilities in the digital channel continue to improve and refocus the business on its core brand assets, the progress can be seen as improved. While progress remains relatively slow as liquidity is only just beginning to return. But it remains very confident.

It is reported that in recent years, P&G its is continuously expanding its skincare footprint through acquisitions and independent incubation. Currently, the two main brands in the P&G skincare category are SK-II and OLAY, and its new brands in recent years happen to be differentiated and complementary to these two brands such as high-end beauty Tula Skincare and Aio which mainly focuses on clean beauty. Compared to SK-II and OLAY, the pricing of the products of these two new brands is more popular. At present, Tula Skincare's "TULA Overseas Flagship Store" has been opened in Tmall and TikTok China, which means it entered the Chinese market. It was unveiled at the recent China International Consumer Products Expo. Aio is exclusively available in Watsons' offline stores and online channels in mainland China, Hong Kong China, Taiwan China, and other Greater China regions.

Combined with the current earnings data and P&G's actions, although China has declined due to the pandemic, but its move to force the skincare sector may give P&G a new growth space. In recent years, P&G has opened up frequent acquisitions and own incubation of new and emerging brands. Combing the common points of these brand integration can be found, P&G tends to look for brands that form a differentiated complement to the existing SK-II and OLAY. Without exception, these new brands pay more attention on social media, which means more youthful and up-to-date.