Two of the world’s biggest consumer goods companies reported better than expected results yesterday, fuelling hopes for a global economic recovery.

Procter & Gamble (P&G), the world’s largest maker of household goods, said that its first-quarter profits fell by 1 per cent from a year ago to $3.35 billion (£2.02 billion) , while sales fell by 6 per cent to $19.8 billion.

However, the figures were better than many analysts expected, as the Head & Shoulders maker has been hit by the consumer spending downturn.

Colgate-Palmolive, the toothpaste-to-soap maker, reported that its third-quarter profit rose by 18 per cent to $590 million after the launch of new products. Sales rose to $4 billion from $3.99 billion, assisted by a 5 per cent global increase in prices to cope with higher material costs. The company now sells 45.1 per cent of all the toothpaste sold around the world, and 30.8 per cent of toothbrushes. Its European business saw revenue fall 5.5 per cent owing to the effects of currency movements.

Because the company’s portfolio is concentrated on relatively cheap basic products such as toothpaste, soap and bleach, Colgate-Palmolive has performed well in the face of the economic downturn.

Its customers seem to have accepted small price rises even as their average spending money decreases.

P&G, on the other hand, has a more wide-ranging portfolio, including expensive brands such as Hugo Boss aftershaves and Dolce & Gabbana perfumes.

Low-priced well-known brands, such as the Pantene and Head & Shoulders shampoos and Gillette Fusion razors, were among the strongest sellers for P&G in the quarter.

This was its first quarter under the leadership of Bob McDonald. The new chief executive wants to win back market share from cheaper competitors including other brands and private supermarket labels.

During the quarter, P&G cut prices across 10 per cent of its portfolio and launched cheaper versions of Pampers nappies and feminine-care and toothpaste products. It also stepped up advertising campaigns that concentrated on price and value.

Mr McDonald said yesterday: “What we are about is growth and we are focused on growth.”

He added that P&G was pleased to see sales improving ahead of earlier expectations, “but we also realise there’s more work to do”.

Connie Maneaty, analyst at BMO Capital Markets, said the improved outlook for organic sales growth was encouraging. She added: “We believe that P&G is emerging from the economic and competitive pressure that characterised the last year.”

Shares in P&G climbed 4.04 per cent to $59.54 in New York trading yesterday, while shares in Colgate-Palmolive rose 0.72 per cent to $76.70.

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