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P&G profit beats on cost cuts, demand for home care goods

Mario Anzuoni | Reuters

Procter & Gamble, the maker of Tide detergent and Pampers diapers, reported a better-than-expected quarterly profit, helped by cost-cutting and strong demand for its baby, feminine and home care products.

P&G's shares were up 3.4 percent at $87.00 in premarket trading on Tuesday.

The company has been selling off unprofitable brands and focusing on core brands such as Tide, Pampers and Gillette to revive sluggish sales. P&G sold 41 of its brands, including Clairol and Wella, to Coty in a $12.5 billion deal earlier this month.

P&G is also reducing costs through a plan to save as much as $10 billion over the next five years, after reducing the same amount in costs over the last five years.

The company plans to reinvest a significant portion of those savings in product and packaging improvement, research and development, and expanding sales coverage, P&G's Chief Financial Officer Jon Moeller said on a media call.

Net sales remained largely flat at $16.52 billion in the first quarter ended Sept. 30, but beat the average estimate of $16.49 billion, according to Thomson Reuters I/B/E/S.

Sales in the United Kingdom, P&G's largest European market, fell 2 percent in the quarter, Moeller said.

Britain's vote to leave the European Union has caused a plunge in the pound, leading consumer goods makers such as P&G's rival Unilever to attempt to raise prices in the market.

Moeller declined to discuss P&G's pricing strategy, but said the U.K. continued to be a "very challenging and highly promotional" market.

P&G said net income attributable to the company rose to $2.71 billion, or 96 cents per share, in the quarter, from $2.60 billion, or 91 cents per share, a year earlier.

Excluding items, P&G earned $1.03 per share from continuing operations, beating the average analyst estimate of 98 cents.

P&G's quarterly sales have been mostly falling for more than three years, as the company has been cutting its brand portfolio.

P&G CFO: Managing 'considerable' improvement

Procter & Gamble's chief financial officer, Jon Moeller, said Tuesday that although the company may be facing headwinds like slowing market growth, its first-quarter earnings report held up regardless.

The CFO said that continuous reductions in costs helped Procter & Gamble's above-average organic sales growth in the first quarter.

"We grew organic sales 3 percent, on volume growth of 3 percent. We grew in every segment, in 10 out of our 10 categories, in every region, and in 9 of our 10 top markets," Moeller told CNBC's "Squawk Box."

Moeller, who is also a member of CNBC's Global CFO Council, said slow market growth can and will be fought through both innovation and active management. As the industry leader in innovation, Procter & Gamble will continue to drive innovation to promote market growth, he said.

Moeller also lauded his team's efforts in what he called "the most significant transformation of this company's portfolio in our history," saying he and his colleagues will remain very involved in its management.

"We will look to grow both organically and inorganically when the right opportunities present themselves," Moeller said.

— CNBC's Elizabeth Gurdus contributed to this report.