* P&G, Colgate post better-than-expected EPS
* Both companies report weaker-than-expected sales
* P&G lowers expectations for 2009 profit, sales
* Shares of both companies fall less than 2 percent
(Updates stock activity)
By Ben Klayman
CHICAGO, April 30 (Reuters) - Procter & Gamble Co (PG.N)
trimmed its fiscal 2009 outlook and did not offer a 2010
forecast on Thursday at a time when investors are searching for
clarity amid the recession, and its shares fell about 2
percent.
The news also pushed down shares of rival Colgate-Palmolive
Co (CL.N), even though it is still comfortable with Wall
Street's expectations. Both household product makers posted
better-than-expected quarterly profits.
"Volumes remain pretty weak and organic sales were probably
the lowest that we've seen in a long time," RBC Capital Markets
analyst Jason Gere said of P&G, on whose stock he has an "sector
perform" rating. "The near-term outlook seemed just a bit more
cautious.
"Here's a company that used to overdeliver and now you're
seeing them kind of underperform relative to the peer group," he
added.
P&G posted its first quarterly profit decline in more than
seven years, since the first quarter of fiscal 2002.
It said it now expected to earn $4.20 to $4.25 a share in
the fiscal year that ends in June, instead of the $4.20 to $4.35
it forecast back in January. It also said organic sales growth
for the year, which excludes the impact of currency
fluctuations, acquisitions and divestitures, would be 2 percent
to 3 percent, instead of 2 percent to 5 percent.
P&G did not give a profit forecast for fiscal 2010, which
begins in July.
P&G and Colgate hiked prices and cut costs to help offset
weaker demand and the impact of the stronger dollar, which
reduces the value of international sales. They are rolling out
new products to entice thrifty consumers back to stores.
LOWER EARNINGS AT P&G
P&G, known for products such as Gillette razors and Tide
laundry detergent, posted a 4 percent drop in quarterly profit
as consumers switched to less-expensive items.
P&G earnings fell to $2.61 billion, or 84 cents per share,
in the third quarter ended on March 31 from $2.71 billion, or 82
cents per share, a year earlier, when there were more shares
outstanding. Analysts polled by Reuters Estimates had expected a
profit of 80 cents a share.
Sales fell 8 percent to $18.42 billion, below the $18.88
billion analysts had forecast, including a 9 percent hit from
the U.S. dollar. Volume declined 5 percent as retailers stocked
fewer items and organic sales rose 1 percent.
Officials said they expect one more quarter of destocking by
retailers, calling it a shorter-term dynamic.
P&G said it was comfortable with the analysts' consensus
earnings-per-share estimate of $4.22 a share for the year, with
a range of $4.20 to $4.25. P&G expects net sales to fall 2
percent to 4 percent this year, pressured by unfavorable foreign
exchange.
For the current fourth quarter, P&G expects sales to drop 8
to 12 percent due largely to currency fluctuations, with organic
sales flat to off 3 percent. It expects earnings in the range of
74 to 79 cents a share.
PROFIT UP AT COLGATE
Colgate, known for its namesake toothpaste, reported
first-quarter profit of $507.9 million, or 97 cents per share,
up from $466.5 million, or 86 cents per share, a year earlier.
The results were a penny higher than analysts had expected.
Sales fell 5.5 percent to $3.50 billion, while analysts had
forecast $3.57 billion. Unit volume fell 0.5 percent.
Both organic sales and global pricing increased 8 percent,
and Chief Executive Ian Cook said that despite the recession
Colgate continues to see consumers trading up to its premium
products, even in emerging markets. He added Colgate had not
seen trade destocking to any significant degree.
Cook said he is comfortable with external profit
expectations for both the second quarter and the year.
Analysts expect Colgate to earn $1.05 a share in the second
quarter and $4.22 for the year.
Shares of P&G fell 1.9 percent to $49.44 after dropping as
low as $48.25 in New York Stock Exchange trade. Through
Wednesday, the stock had fallen 18.4 percent this year.
Colgate stock, which had been down 12.9 percent year to
date, ended the session down 1.2 percent at $59 after falling as
low as $58.19.
Cook said Colgate had not really seen any impact on its
Mexican business from influenza A (H1N1) and the company is
keeping its Mexican facilities open. While P&G did not comment
about the flu during its call, earlier this week the company
imposed a temporary travel ban to Mexico.
(Reporting by Ben Klayman and Jessica Wohl; Editing by Lisa Von
Ahn and Matthew Lewis)
