Tags: procter | gamble | p&g | outlook

P&G Cuts Outlook as Sales Slow in Europe, US

Wednesday, 20 June 2012 07:32 AM

Procter & Gamble Co., the world’s largest consumer-goods company, cut its earnings and revenue forecasts for the second time in less than two months as slowing economies in Europe and the U.S. weigh on sales growth.

Organic sales in the fiscal fourth quarter will rise 2 percent to 3 percent, compared with a prior expectation of 4 percent to 5 percent, Chief Executive Officer Bob McDonald said Wednesday at a conference in Paris. Earnings per share in the period ended June 30 will be $0.75 to $0.79 excluding some items, compared with a previous forecast of $0.79 to $0.85. That’s less than the $0.84 average of 22 estimates compiled by Bloomberg.

The reduced forecasts illustrate the difficulties faced by consumer-products makers as shoppers in Europe and North America balk at weakening economies. Danone, the world’s biggest yogurt maker, cut its profitability forecast Tuesday. Europe is “difficult for everybody,” Jean-Marc Huet, chief financial officer of Unilever, said at the Paris conference Tuesday. Unilever and Danone shares fell for a second day Wednesday.

“The revisions to the company’s fourth-quarter outlook are primarily driven by slower than anticipated top-line growth from slower than expected market growth rates and market share softness in developed regions, and negative impacts from foreign exchange rate change,” P&G said Wednesday in a statement.

2013 Forecasts

The maker of Tide washing detergent last cut its current- year profit forecast on April 28, citing regulations in Venezuela and slowing shipments in some developed markets.

The Cincinnati-based maker of Gillette razors also forecast growth of 2 percent to 4 percent in fiscal 2013 organic sales. So-called core earnings per share will be “in-line to up mid- single digits,” P&G also said in the statement.

In February, McDonald announced a program of $10 billion in cost cuts and savings through 2016. “Good progress” has been made in the first three months of the process, he said Wednesday.

Procter & Gamble is working to boost sales in developed countries including the U.S. and said today it needs to balance developing and emerging-market growth.

“We need to keep growing in our home market,” McDonald said, even as developing economies represent a growing portion of sales. Developing markets will represent 37 percent of revenue this year compared with 20 percent in 2000.

Investor Impatience

Since taking over in July 2009, McDonald has focused on adding new categories and countries toward a goal of reaching 5 billion customers by 2015. The maker of Pampers diapers has seen patience wane among investors and analysts as the company’s share price has underperformed peers such as Kimberly-Clark Corp. and Colgate-Palmolive Co. in the past three years.

Procter & Gamble fell 0.1 percent to $62.21 Tuesday in New York trading. The stock slid 1.7 percent to the equivalent of $61.18 in European trading as of 9:57 a.m. London time.

In Europe Wednesday, Unilever shares fell as much as 2 percent, while Danone declined as much as 1.8 percent. Nestle SA, the world’s biggest food company, dropped as much as 1.3 percent.

© Copyright 2018 Bloomberg News. All rights reserved.

1Like our page
Wednesday, 20 June 2012 07:32 AM
Newsmax Media, Inc.

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved