P&G CFO: Consumers Down, Costs Stay High

Procter & Gamble is still seeing some gains despite a decline in consumer sentiment, according to the new chief financial officer of the company.

“We grew organically – two percent – importantly maintaining or growing organic sales at each of our six operating segments," said Jon Moeller in a Friday interview on CNBC. (See his full comments in the video)

Nevertheless, the decline in demand is taking a toll.

Procter & Gamble earned $1.58 a share in the second quarter of 2008, versus December guidance of $1.58 to 1.63. Full year 2009 guidance of $4.20 to $4.35 was slightly below prior guidance of $4.28-4.38 and about in-line with analyst expectations of $4.29. (Read more about its earnings here).

“We’re operating – and it’s no surprise to anybody – in a very difficult operating environment, with all-time lows in consumer confidence, credit market issues that are causing reductions in trade inventories, commodities still up significantly versus year-ago levels and foreign exchange headwinds,” he said.

He noted that despite recent price drops in some "highly visible" commodities like oil, which P&G doesn't directly purchase, other areas remain high.

"If you were to look at a representative market basket of commodities that we do purchase, those commodities are up still year-over-year over 20% ... at this point we're not seeing a need for broad scale price reduction," he said.

Moeller said in this economic environment, innovation is key.

“For consumers it’s all about value; innovation creates value, so we’re very focused on maintaining investments in both brand building and innovation.”

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