Two of P&G's Indian subsidiaries Gillette, P&G Hygiene and Health Care, see share prices fall in November as increased costs affect margins
November 22, 2011
Procter & Gamble Co.’s (P&G) Indian subsidiaries Gillette India Ltd. and P&G Hygiene and Health Care Ltd. saw their share prices drop by 5% and 11% in November, livemint.com reported Nov. 20.
In the previous quarter, Gillette and P&G Hygiene and Health Care reported sales growth of 21% and 32.4%, respectively, while P&G has been cutting prices and introducing low-priced products to reach deeper into the market.
Although the companies are pursuing durable sales growth strategies, the benefits are not resulting in earnings growth because increased costs, for raw materials, freight, employees and marketing, are eating into their profit margins, according to livemint.com.
P&G Hygiene and Health Care saw a 4.25%-point drop in its profit margins in September while Gillette’s margins fell 15%-points.
According to the article, the drop in share prices may be a sign of investors realizing the current situation will be much more long-lasting than they anticipated.
The primary source of this article is livemint.com, New Delhi, India, on Nov. 20, 2011.