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Procter & Gamble profit rises 9 percent

Consumer products giant Procter & Gamble Co. on Monday said its fourth-quarter profit rose 9 percent, led by strong volume growth in its beauty, fabric, health and home care segments.
/ Source: The Associated Press

Procter & Gamble Co. on Monday said its fourth-quarter profit rose 9 percent, led by strong volume growth in the consumer products company’s beauty, fabric, health and home care segments and increasing sales in developing markets.

The make of Tide detergent, Pampers diapers, Crest toothpaste and other household brands also backed analysts’ earnings forecast for its current quarter and fiscal year. P&G plans to expand its lineup this fall by completing its deal for shaving products maker Gillette Co.

P&G reported earnings of $1.5 billion, or 56 cents per share, for the three months ended June 30 compared with $1.37 billion, or 50 cents per share, a year ago. Sales jumped 10 percent to $14.26 billion from $12.96 billion.

The results topped analysts’ expectations of 55 cents per share on revenue of $14.05 billion, according to a survey by Thomson Financial.

“These strong results were broad-based,” said A.G. Lafley, P&G’s chairman, president and chief executive. He said the company’s balance, core strengths and innovation leadership is a strong combination that will be bolstered by the Gillette additions. The merger is expected to be completed this fall.

“Together, we will have even more capability,” he said in a conference call with analysts.

Organic sales, which strip out the effects of acquisitions, divested businesses and foreign exchange swings, rose 9 percent. Unit volume grew 6 percent, led by strong gains in P&G’s beauty, fabric, health and home care businesses, particularly in developing markets.

“The top line continues to be very robust,” said Jason Gere, an analyst at A.G. Edwards who has a buy rating for P&G stock. “They exceeded their expectations in a very trying industry environment.”

Gere said the decline likely was because some investors were surprised by P&G’s lower margins due to higher commodity costs.

In the beauty segment, earnings climbed 27 percent to $644 million on sales of $4.93 billion, driven by strong growth of the Olay brand and solid results in emerging markets.

In the family health segment, earnings surged 42 percent to $182 million, while sales jumped 16 percent to $1.9 billion. P&G credited the improved performance to continued success of Prilosec, its popular over-the-counter heartburn drug.

In the household care segment, earnings fell 11 percent to $458 million, hurt by higher commodity costs, but sales rose 10 percent to $3.85 billion. P&G said higher commodity costs posed significant challenges during the quarter, but the company responded with price increases across most of its businesses.

Lafley said Dawn dishwashing liquid has become P&G’s 17th brand with $1 billion in sales, and that adding Gillette’s brands will give the company 22 billion-dollar brands.

For the year, P&G said earnings increased to $7.26 billion, or $2.66 a share, on sales of $56.74 billion. That is up from $6.48 billion, or $2.32 a share, on sales of $51.4 billion a year earlier.

For the current quarter and full year, P&G said it is comfortable with analysts’ current consensus estimate of 78 cents per share and $2.93. Sales growth is expected to range from 6 percent to 8 percent, P&G said.