By Jessica Wohl
Oct 25 Procter & Gamble Co is chugging
along with its turnaround, posting a quarterly profit that met
Wall Street's expectations and holding to its annual forecasts
as the world's largest household products maker gets a lift from
cost cuts and a lower tax rate.
Shares of P&G fell nearly 1 percent to $79.93 in morning
trading on Friday.
The maker of Pampers diapers and Tide detergent is trying to
reinvigorate itself under Chief Executive Officer A.G. Lafley,
who returned in late May to replace Bob McDonald.
Lafley, who did not speak on the company's conference call
on Friday, has previously said the current fiscal 2014 would be
a "transition" year, after the "stepping stone" year that ended
in June. He has already split P&G into four businesses, hoping
the new structure will boost efficiency.
"We continue to think the appointment of Lafley is more
temporary in nature, until a permanent successor can be named,"
said Morningstar analyst Erin Lash. She said she was "a bit
perplexed" by P&G's decision to have Lafley participate only on
certain calls and at major industry conferences as the company
works to "instill confidence and reignite its momentum."
P&G said it still expected 5 percent to 7 percent growth in
earnings per share this fiscal year, excluding restructuring
charges. The company abandoned quarterly forecasts earlier this
It still expects organic sales, which strip out the impact
of currency changes, acquisitions and divestitures, to rise 3
percent to 4 percent this fiscal year.
Regarding Lafley's absence from the call, a P&G spokesman
Paul Fox said: "This change reflects our focus on annual results
and trends rather than quarterly results and is consistent with
our recent move to fiscal guidance."
P&G held or increased market share in businesses that
represent about two-thirds of its sales during the quarter,
Chief Financial Officer Jon Moeller said. While he said he was
"reasonably happy" with the results, he added: "We simply have
to execute better, more consistently and more reliably."
P&G competes against a variety of companies, including
Unilever Plc . On Thursday, Unilever's results
suggested that its North American market share in the
high-margin personal care business suffered because of
promotions that P&G ran on its hair care products such as
However, Moeller refuted such assertions, saying that P&G's
hair care product promotions were down from a year earlier. The
company's market share in the category was flat.
Colgate-Palmolive Co also discussed a more
promotional U.S. market when it released its results on
"We see a different reality," Moeller told reporters.
"Promotion is important, and we will be competitive in our
promotional activities, but it is not an area where we seek to
In North America overall, P&G's share of the volume of goods
that were sold on promotions was down 7 percent from a year
earlier, Moeller said.
P&G said it had earned $3.03 billion, or $1.04 per share, in
the first quarter ended on Sept. 30, up from $2.81 billion, or
96 cents per share, a year earlier.
Core earnings per share, which exclude restructuring
charges, fell 1 percent to $1.05 and met analysts' expectations,
according to Thomson Reuters I/B/E/S.
Sales rose 2.2 percent to $21.21 billion, topping Wall
Street's forecast of $21.04 billion.
Organic sales rose 4 percent. Such sales were up in every
category except healthcare, where they were flat, due in part to
a pet food recall.
The beauty business was a disappointment, with organic sales
growth of just 1 percent, analysts said. P&G blamed the sluggish
growth on factors such as a decrease in skin care product sales.
JPMorgan analyst John Faucher said he had expected 3 percent
organic sales growth in the beauty division.