* Q3 core profit per share 99 cents vs Street view 96 cents
* Sales $20.6 billion vs view $20.73 billion
* Q4 profit view lighter than analysts' expectations
* Shares fall as much as 6 pct
(Adds comments from analyst, investor, company; updates share
By Jessica Wohl
April 24 Procter & Gamble Co said on
Wednesday that profit would fall more than Wall Street
anticipated this quarter as it increases spending to promote
several new products.
The news spooked investors who do not want to wait until
2014 for better sales increases. Shares of the world's largest
household products maker fell as much as 6 percent after closing
at an all-time high of $82.54 on Tuesday.
"There's a lot of frustration that they've been talking
about a lot of actions they've been taking but we haven't really
seen an acceleration in the sales growth," said David Blount,
co-portfolio manager of the Growth & Income Fund at Eagle Asset
Management, which includes P&G shares.
The company, maker of Pampers diapers, Gillette razors and
many other products, has been under greater scrutiny to improve
after cutting profit expectations in the past and learning that
activist investor Bill Ackman invested in the stock.
Cincinnati-based P&G also posted a fiscal third-quarter
profit on Wednesday that topped estimates despite sales that
were weaker than both the company and analysts had anticipated.
Chief Executive Bob McDonald was roasted by analysts on a
conference call a year ago when P&G gave a profit warning. While
Wednesday's call was not as tense, analysts wanted to know why
the company has not yet posted better sales growth more than a
year into its turnaround.
P&G, which announced a $10 billion restructuring in February
2012, said that its push for more innovation means that several
products such as new Iams pet foods and Olay skin creams will
soon hit stores. After cutting billions of dollars in costs,
along with eliminating hundreds of more jobs than anticipated,
it will now spend more to promote those new goods and even to
build the plants to produce them around the world.
For the current fourth quarter ending in June, P&G said
profit should fall to 69 cents to 77 cents per share, while
analysts expected it to earn 81 cents per share, according to
Thomson Reuters I/B/E/S. P&G earned 82 cents per share in the
fourth quarter of fiscal 2012.
The company cited factors including weak market growth,
higher marketing and other costs and volatility in Venezuela,
Argentina, Egypt, Syria and South Korea.
Wednesday's fiscal third-quarter results were a sharp
departure from the fiscal second quarter, when P&G raised its
annual profit forecast and its shares jumped. On
Wednesday, on the heels of the better-than-expected third
quarter profit, it raised only the bottom end of its annual
forecast range by 2 cents per share.
"They're still making progress, they're still on the right
track, it is just going to be a little more slowly than what
people expected," said Edward Jones analyst Jack Russo.
P&G insists that its forecast is "realistic, not
conservative," especially given the headwinds it faces such as
volatility in Venezuela and elsewhere, Chief Financial Officer
Jon Moeller told analysts.
Along with spending on marketing to promote its new
products, P&G is dealing with what it calls a "choppy" economic
recovery, and sees a 1 to 2 percent impact on its sales this
year from foreign exchange rates.
Its shares slid as low as $77.48 on Wednesday and were last
trading down 4.7 percent at $78.05, wiping out nearly all of
this month's gains. Shares of rivals such as Colgate-Palmolive
Co and Kimberly-Clark Corp were down less than 2
JOB CUTS EXCEED GOAL
While products such as single-dose Tide Pods laundry
detergent have boosted U.S. sales, P&G said it still needs to
figure out the formula for getting products such as Pantene
shampoo and Olay skin creams to stand out among competitors. Net
sales decreased in the hair care and skin care business in the
P&G is taking the right steps by cutting costs, bringing out
new products and growing in developing markets, but it is
important for it to show progress in the beauty unit in the next
quarter or two, said Russo.
P&G said it earned 99 cents per share on a core basis in the
quarter ended in March, topping analysts' target of 96 cents.
Core earnings exclude items such as restructuring charges.
Overall sales rose 2 percent to $20.598 billion while
analysts were looking for sales of $20.73 billion. The company
had forecast 3 to 4 percent in sales growth.
P&G's organic sales, which strip out the impact of
divestitures and foreign exchange changes, grew 3 percent - at
the low end of its forecast of 3 to 4 percent.
On a net basis, the company earned $2.57 billion, or 88
cents per share, in the fiscal third quarter. That was up from
$2.41 billion, or 82 cents per share, a year earlier.
McDonald declined to comment on any discussions he may have
been having with Ackman, who is known to push for change at
companies in which he invests. Ackman's Pershing Square had a
1.02 percent stake in P&G, or 27.95 million shares, as of
December, making it P&G's eighth-largest shareholder, according
to Thomson Reuters data.
P&G said it now plans to repurchase $6 billion of its stock
this year, at the high end of its prior forecast for $5 billion
to $6 billion in buybacks. Last June, P&G decided to hold off on
buybacks, but in August quickly reverted back to its usual plan.
P&G also said it had cut 6,250 jobs as of March 31, ahead of
its goal to cut 5,700 jobs by the end of June.
(Reporting by Jessica Wohl; in Chicago; editing by Jeffrey
Benkoe and Matthew Lewis)