* Q3 core EPS $0.94 vs Wall St view $0.93
* Full-year forecast cut on pricing issues, commodity costs
* Shares down 3.2 pct at $64.75
By Jessica Wohl
April 27 Procter & Gamble Co cut its
full-year profit outlook, citing weakness in developed markets
and said it would need to roll back some price increases,
frustrating investors who wanted faster results from its
The world's largest household products maker, whose shares
fell more than 3 percent on Friday, has been underperforming
rivals such as Unilever and Colgate-Palmolive
Co. In February, it announced a restructuring plan to cut
5,700 nonmanufacturing jobs and $10 billion in costs by the end
of fiscal 2016.
P&G, which makes Pampers diapers and Gillette razors, said
on Friday it continues to feel the pinch of higher costs for
commodities, such as diesel fuel, alcohol and chemicals.
And in Venezuela, where P&G sales are worth an annual $1
billion, new regulations forced the company to cut prices by as
much as 25 percent, according to Chief Financial Officer Jon
Moeller. Venezuela froze prices on 19 key goods in December in
an attempt to combat inflation.
"Where is the taking responsibility for the weak numbers, as
opposed to saying 'not our fault, it's just really tough out
there'?" Citigroup analyst Wendy Nicholson said on a conference
call with senior management.
P&G Chief Executive Bob McDonald said that as CEO, he took
responsibility. But the admission didn't satisfy analysts.
"How long do you expect investors to wait? How long does
your current plan have to work? How much patience does the board
have?" asked Sanford Bernstein analyst Ali Dibadj.
P&G said earnings fell to $2.41 billion, or 82 cents per
share, in its fiscal third quarter through March, from $2.87
billion, or 96 cents per share, a year earlier.
Core earnings per share, which excludes items such as
restructuring charges, were flat at 94 cents, a penny above the
average analyst estimate, according to Thomson Reuters I/B/E/S.
Sales grew 2 percent to $20.19 billion, a tad below the average
Wall Street forecast of $20.29 billion.
The results came a day after Anglo-Dutch consumer goods
giant Unilever beat market expectations with an 8.4 percent rise
in first-quarter sales, sending its shares up 3 percent.
Colgate-Palmolive Co's quarterly sales
rose 5.2 percent, also slightly better than anticipated.
HASN'T INNOVATED ENOUGH
McDonald, who became P&G's CEO in July 2009, said the
company has not innovated enough in certain areas, particularly
beauty care in the United States. More broadly, he blamed flat
volume growth in the categories where P&G competes.
"The CEOs I talk to basically say that they see a
decelerating trend," McDonald told reporters. Much of the growth
in developed markets "will be share growth, because the markets
aren't growing," he said.
P&G, like many other household products makers, has raised
prices to mitigate the impact of higher commodity costs. It
rolled out $3.5 billion worth of price increases this year, but
about $100 million to $200 million of them didn't stick as
competitors didn't match them, CFO Moeller said on the call.
Now P&G is rescinding some of the increases, either by
lowering prices, or keeping them unchanged while increasing the
size of the products. The rollbacks are coming in laundry
detergent in the United States, Britain and Mexico, and North
American oral care, dishwasher detergent, and blades and razors.
P&G said it now expects core earnings per share of $3.82 to
$3.88 this year, on sales growth of 4 percent. Back in February,
it had forecast $3.93 to $4.03 for the year ending in June.
Analysts were expecting full-year profit of $3.96 per share.
P&G expects to earn 79 cents to 85 cents per share in the
current quarter. It forecasts 1 percent to 2 percent sales
growth and said organic sales, which strip out the impact of
deals and currency, should rise 4 percent to 5 percent.
Shares of P&G fell 3.5 percent to $64.52 on the New York