Procter & Gamble's profits grow despite being hit by Middle East tensions and China's economic slowdown

Procter & Gamble Co reported a profit increase recently as strong demand in the United States and many European markets offset weakness elsewhere due to tensions in the Middle East and poor performance in China.

Consumer goods giant Procter & Gamble, which makes products like Tide detergent, Bounty paper towels and Gillette razors, reported flat sales in the just-ended quarter but a 3% price increase, which helped a slight increase in overall sales.

Jon Moeller, Chairman, President and Chief Executive Officer said: "Despite multiple headwinds, we delivered solid sales and strong earnings growth in the third quarter, allowing us to increase our earnings per share growth guidance and maintain our revenue outlook for the fiscal year."

In beauty, organic sales were up 3% compared to the same period last year. Skin and personal care organic sales declined by single digits due to lower sales of the ultra-premium SK-II brand, partially offset by volume growth from personal care innovations. Organic sales of hair care products increased by high single digits due to higher pricing in Latin America, Europe and North America.

Chief Financial Officer Andre Schulten said consumption in key markets in the United States and Europe was "very strong." But he said sales in the Middle East were pressured by conflicts in the region, while sales in China fell 10%, excluding the impact of currency changes and acquisitions.

Profit rose 11% to $3.8 billion in the quarter, while revenue rose 1% to $20.2 billion. The increase was entirely due to higher prices, while sales volumes remained stable. Prices increased by an average of 3% across all sectors and even increased by 10% in the personal care sector.

He said that despite price increases over the past few years, "American consumers have not lowered their purchasing prices," arguing that consumers will stick with known products because of their reliability.

In China, Schulten noted, "underlying market conditions are weak" and sales of SK-II's premium skin care products have lagged, hurt by anti-Japanese sentiment. Schulten said the company is still seeing some improvement in the world's second-largest economy, but it will take another quarter or two for sales to return to growth.