P&G fourth quarter profit falls

CHICAGO (Reuters) - Procter & Gamble Co posted a disappointing 11 percent decline in quarterly sales, hurt by weak demand for some Gillette razors and Braun shavers, dragging its shares down about 3 percent.

The company, which also makes Tide laundry detergent and Pampers diapers, said sales could fall as much as 10 percent this quarter and profit may not meet Wall Street's expectations.

The weak sales and outlook overshadowed P&G's better-than-expected profit.

"The truth of the matter is, while we performed well, head to head, in some of our categories, we frankly aren't performing that well in some of our others," Chairman A.G. Lafley said on a conference call.

Still, pressure from foreign currency fluctuations will not be as great this year as previously anticipated, which allowed P&G to maintain its profit forecast for the year, its first under Chief Executive Bob McDonald, who took over in July.

P&G, which in recent months has touted itself as recession-resistant but not recession-proof, has lost some market share as consumers buy cheaper or private-label brands.

"It was a pretty rugged quarter, no doubt about it," said Edward Jones analyst Jack Russo. "They've got some work to do and their results are definitely below what some of their peers are reporting."

Sales fell in each of P&G's categories, with the biggest percentage decline a 17 percent drop in grooming.

Overall sales fell 11 percent to $18.66 billion, missing analysts' average forecast of $19.27 billion, according to Reuters Estimates.

While P&G anticipated sales would fall in the quarter as consumers cut back and it felt the impact of the stronger U.S. dollar, the drop was deeper than Wall Street expected and outpaced the 5.5 percent decline and 5.6 percent decline posted by Colgate-Palmolive Co and Kimberly-Clark Corp, respectively.

P&G shares fell about 3 percent to $53.81 in late morning trading, erasing more than two weeks of gains. The shares have fallen 13.6 percent so far this year. The only component of the Dow Jones industrial average that has fared worse is General Electric, which is down 14 percent.

P&G shares have also underperformed those of Colgate, which are up nearly 5 percent, and Unilever's, which have fallen about 3 percent. Unilever is set to report quarterly results on Thursday.

PROFIT AND SALES FALL

P&G earned $2.47 billion, or 80 cents per share, in its fiscal fourth quarter, down from $3.02 billion, or 92 cents per share, a year earlier. Analysts expected P&G to earn 78 cents.

On an organic basis, which excludes the impact of currency fluctuations, acquisitions and divestitures, sales fell 1 percent and volume fell 4 percent. Volume, like sales, also lagged analysts' projections.

Lafley cited products such as Pringles snacks, Duracell batteries, women's and disposable razors and North American oral care as businesses that did not do so well.

"We have some issues like we always do," he said.

P&G also said it should see a $1 billion benefit from easing commodity costs this year, after facing about $2 billion in higher commodity costs during fiscal 2009.

P&G expects to earn 95 cents to $1 per share from continuing operations in the first quarter, which ends in September. Analysts had called for a profit of 99 cents per share. It said organic sales should be flat to down 3 percent and net sales should fall 7 percent to 10 percent.

P&G expects results to improve this year as it expands value-oriented items such as Pampers Simply Dry diapers and addresses some prices that it raised too high on items such as detergent and paper products.

The company said it should earn $3.65 to $3.80 per share from continuing operations this year, with organic sales growth of 1 percent to 3 percent.

"These guys will be fine, it's just going to take a little time and patience by investors, but we'll wait patiently and see if they can get this thing going in the right direction," said Russo, who has a "buy" rating on the shares.

(Reporting by Jessica Wohl, editing by Maureen Bavdek)