P&G profit up but forecast pressures shares

By Jessica Wohl

CHICAGO (Reuters) - Procter & Gamble Co. (PG.N: Quote, Profile, Research, Stock Buzz) posted a slightly better-than-expected rise in quarterly profit on Friday, but its shares fell after the company forecast fiscal year earnings below Wall Street expectations.

After spending the better part of the last two years integrating its acquisition of Gillette, the maker of Tide detergent and Pampers diapers is now girding itself to compete with smaller rivals such as Colgate-Palmolive Co. (CL.N: Quote, Profile, Research, Stock Buzz) and Kimberly-Clark Corp. (KMB.N: Quote, Profile, Research, Stock Buzz).

That strategy includes accelerating its share buybacks, boosting sales in emerging markets, focusing on newer products such as Crest Pro-Health and shedding some of its businesses.

The market, however, focused on the company's disappointing profit forecast.

"Sentiment on the stock has been poor for some time, and we believe the stock needed a stronger outlook to rally on the earnings report," said Goldman Sachs analyst Amy Low Chasen.

Back in May, P&G said it was comfortable with a fiscal 2008 earnings estimate of $3.47 per share, which was analysts' consensus view at the time. Analysts then raised their average forecast to $3.48.

On Friday, P&G said it expects to earn $3.44 to $3.47 per share in fiscal 2008, which began in July.

Its fourth quarter profit was $2.27 billion, or 67 cents per share, in the fiscal fourth quarter ended June 30, up from $1.9 billion, or 55 cents, a year earlier.