Procter & Gamble Falls As Profits Slide; Full-Year Projections Lowered

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Shares of Procter & Gamble (PG) are sliding Friday after the consumer products firm*reported fiscal second quarter earnings that exceeded forecasts, but included a lower full-year outlook by management due to unfavorable exchange rates. For the December quarter, the maker of Bounty paper towels and Gillette razors generated*a profit of $1.69 billion, or 57 cents a share, down from a profit of $3.33 billion, or $1.11 a share, a year earlier. Stripping out a 50-cent per-share write-down, P&G reported core earnings of $1.10 a share for the quarter. Net sales rose 3.7% to $22.14 billion.

The consensus of 21 analysts polled by Thomson Financial was that PG would earn $1.08 a share on $22.19 billion in revenue. PG’s gross margin narrowed to 49.7% from 51.8% as commodity prices rose in the quarter.

But analysts were disappointed by the consumer food giant’s view that the January-March quarter was shaping up to produce earnings of between 91-97 cents a share. The Street had been projecting around $1.06 a share. P&G also said in a conference call with analysts and investors that full-year earnings look to wind up around $4-$4.10 a share, down from its prior call of $4.15-$4.33 a share.

While the company noted currency market fluctuations, P&G Chief Financial Officer Jon Moeller told analysts and investors that commodity costs finally seem to be easing somewhat compared to a year ago. Meanwhile, analysts were also pointing to expectations that price discounting by management will be held to a minimum. It’s worthwhile to note that sales excluding the impact of currency translation, acquisitions and divestitures are now forecast to rise 4% to 5%. “I don’t seen anything that leads to a big round of promotions or discounting across the categories,” Moeller said during the conference and reported by Dow Jones Newswires.

PG’s shares were trading rather lightly early Friday. The company’s stock most recently was sliding 0.34%, or 22 cents, at $64.58 a share. It had been down more than 1% in pre-markets.



Original Article Source by Barrons.com