updated 10/30/2007 9:08:40 AM ET 2007-10-30T13:08:40

Consumer products maker Procter & Gamble Co. said Tuesday its first-quarter profit rose 14 percent, but said rising commodity, energy and product investment costs will hurt its second-quarter margins.

The maker of Pantene shampoo and Pampers diapers said net income grew to $3.08 billion, or 92 cents per share, from $2.7 billion, or 79 cents per share, a year ago. Excluding a German tax benefit of 2 cents per share, the company earned 90 cents per share in the latest period.

Sales rose 8 percent to $20.2 billion from $18.79 billion a year ago, with internal growth contributing 5 percent of the increase and the rest attributable to the weaker dollar. The company said its fabric and home care, baby and family care and grooming segments led the growth.

Analysts surveyed by Thomson Financial expected profit of 89 cents per share on revenue of $20.23 billion.

The company raised its fiscal-year outlook by 2 cents per share to reflect the one-time tax benefit, now forecasting a profit of $3.46 to $3.49 per share, a 14 percent to 15 percent increase from a year ago.

The company expects earnings per share for its fiscal second quarter to range between 95 cents and 97 cents per share. Wall Street was looking for earnings of 97 cents a share.

P&G said gross margins are expected to be temporarily lower next quarter due to higher commodity and energy costs and investments needed behind its North America laundry initiative.

P&G said it expects gross margins to recover in the second half of its fiscal year due to pricing and increased cost savings from restructuring projects.

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