By Phil Wahba
Jan 24 Procter & Gamble Co, the world's
largest household products maker, reported a dip in quarterly
profit on Friday as its push in emerging markets led to a lower
gross profit margin.
Chief Financial Officer Jon Moeller told reporters on a
conference call that sales in emerging markets had risen 8
percent during the second quarter, easily outpacing developed
markets, where sales barely edged up.
But P&G's gross margin is lower in those markets as the
company establishes itself. Still, the costs are worth paying,
said one investor.
"The emerging markets are definitely the future for P&G,"
said Matt McCormick, portfolio manager at Bahl & Gaynor
Investment Counsel, which manages about $11 billion and has long
owned P&G and Kimberly-Clark Corp shares.
P&G's Moeller said its market shares in both emerging and
developed sectors had held steady.
Earlier this weak, rival Unilever said it
would stick to its emerging markets growth strategy as a
fourth-quarter recovery in sales there boosted 2013 results.
P&G's gross profit margin slipped 0.9 percentage points, in
part because of stagnant sales of its beauty products, which
have higher margins. The margins were helped by lower
P&G, the maker of Pampers diapers and Tide detergent, left
its 2014 forecasts unchanged. It still expects organic sales,
which strip out the impact of currency changes as well as
acquisitions and divestitures, to rise 3 percent to 4 percent,
and core earnings to rise 5 percent to 7 percent.
"It is reassuring to see it has confidence it can hit the
numbers, despite the weak categories," J.P. Morgan analyst John
Faucher wrote in a note.
The company's beauty division continued to struggle during
the quarter, with organic sales unchanged as skin care results
slipped. P&G's health care segment reported the fastest growth,
rising 5 percent.
The company earned $3.43 billion, or $1.18 per share, in its
fiscal second quarter ended Dec. 31, down from $4.06 billion, or
$1.39 per share, a year earlier. Core earnings per share,
excluding restructuring charges, fell 1 percent to $1.21.
Analysts expected $1.20 a share.
Sales rose 0.5 percent to $22.28 billion, in line with the
average Wall Street estimate, according to Thomson Reuters
I/B/E/S. Organic sales rose 3 percent.
Procter shares rose 0.7 percent to $78.79 in premarket
Rival consumer goods company Kimberley Clark Corp
reported that organic sales rose 5 percent, and forecast they
would rise 3 percent to 5 percent in 2014.