Procter & Gamble Profit Up on Sales in Developing Markets
Procter & Gamble posted a 13.6% rise in quarterly profit, driven by developing markets, and raised the low end of its full-year profit forecast due to the growth in the quarter.
Profit rose to $2.51 billion, or 74 cents a share, in the fiscal third quarter ended in March, from $2.21 billion, or 63 cents a share, a year earlier.
The maker of Gillette razors and Pampers diapers said in March that it expected to earn 72 cents to 74 cents a share. Analysts, on average, expected 74 cents a share, according to
Sales rose 8.4% to $18.69 billion, exceeding analysts' average forecast of $18.59 billion. P&G had forecast a 7% to 9% rise.
Organic sales, which exclude mergers and the impact of foreign exchange, rose 6%, in line with the company's forecast of 5% to 7% growth.
Unit volume rose 6%, driven by products such as the Tide, Ariel and Downy fabric care brands, as well as Head & Shoulders shampoo and the Olay skin care line.
“The developing markets, as a group, are doing double digit (growth) and that’s clearly one of the things helping us to get to the upper ranges,” P&G CFO Clayton Daley told CNBC's “Squawk Box” on Tuesday.
He said the company doesn't need to make future acquisitions to boost profits.
“There’s still some hard lifting to do to get the Gillette acquisition done with excellence,” Daley said. “We do not need acquisitions to deliver our growth strategy. We think if we deliver 4% to 6% sales growth, double-digit earnings per share growth, do a good job on cash flow, we’re going to do well in the long-term. If you look back historically, Proctor & Gamble has out-performed the S&P by over 200 basis points over five-, 10-, 15-, 20-, 25- and 30-year periods. That’s a great track record. We think we can keep (it) up.”
P&G said it now expects to earn $3.01 to $3.03 a share this year, compared with a prior target of $2.99 to $3.03. That view includes dilution from the Gillette acquisition at the low end of the prior forecast of 12 cents to 18 cents a share.
Analysts, on average, expect $3.03 a share.
P&G said full-year sales should rise 11% to 12%, at the top end of its prior view, with organic sales up 5% to 6%.
For the current fiscal fourth quarter, which ends in June, P&G forecast earnings of 64 cents to 66 cents a share. Analysts expect earnings at the top end of that range.
Fourth-quarter sales should rise 6% to 7%, with organic sales up 5% to 6%, P&G said.
Shares of Cincinnati-based P&G declined 1.7% during the quarter, while the Dow Jones industrial average, of which it is a component, fell less than 0.9%.