Procter & Gamble Profit Up on Weak Dollar, Cost Cuts

Procter & Gamble Tuesday posted a 14 percent increase in quarterly profit, helped by sales of Gillette razors, Charmin toilet paper and Pampers diapers, the weaker dollar and cost-cutting measures.

Boxes of Procter & Gamble's Tide with Bleach.
Mark Lennihan
Boxes of Procter & Gamble's Tide with Bleach.

The company said profit was $3.08 billion, or 92 cents a share, in the fiscal first quarter that ended Sept. 30, compared with $2.70 billion, or 79 cents a share, a year earlier.

Excluding a one-time tax benefit, earnings were 90 cents a share. Analysts on average had forecast 90 cents a share, according to Reuters Estimates.

Clayton Daley, P&G CFO, told "Squawk Box" that results would have been better if it wasn't for the rise in costs.

"Clearly we saw 80 basis points of impact on commodities and energy during the July-September quarter," Daley said. "That certainly didn't help, but that was pretty much in line with what we expected."

On Sept. 18, the company reiterated its forecast of 88 to 90 cents a share.

Sales rose 8 percent to $20.20 billion. Analysts on average had forecast $20.25 billion, according to Reuters Estimates.

Organic sales, which exclude the impact of acquisitions, divestitures and foreign exchange, increased 5 percent during the quarter, in line with the company's target range, P&G said.

Price Rises

P&G has been boosting sales in emerging markets, focusing on new products such as its Crest Pro-Health oral-care line, and looking at selling off some brands.

At the same time, the company is raising prices on a number of products to help offset rising costs for oil, resin and pulp.

"As commodities have gone up, frankly more than we had anticipated going into this year, we have had to raise prices on a number of product lines in the US" Daley told "Squawk Box."

P&G said it expects earnings of $3.46 a share to $3.49 a share in fiscal year 2008, raising its forecast range by 2 cents to account for the tax benefit.

Sales are expected to grow 6 percent to 8 percent, with currency accounting for about 3 percent, the company said. Analysts on average have forecast $3.47, according to Reuters Estimates.

The company was not likely to change the outlook for next year, Daley said.

"We raise guidance when we think it's appropriate," Daley said on CNBC. "And in light of the commodity and energy price situation we're facing right now, we just don't think raising guidance would be prudent."

For the second quarter, the company forecast earnings of 95 to 97 cents a share, with sales up 6 to 8 percent.

P&G shares closed at $71.83 on Monday on the New York Stock Exchange. The stock trades at 20.7 times estimated 2008 earnings per share, compared with a multiple of 19.9 for rival Colgate-Palmolive.

-- contributed to this report