(Reuters) - Procter & Gamble Co PG.N, the world's largest household products maker, reported a higher than expected quarterly profit on Wednesday, helped by an increase in home care products sales and better cost control.
But net sales were unchanged at $20.6 billion, disappointing investors looking for stronger growth. Organic sales, which exclude the impact of divestitures and acquisitions, rose 3 percent.
Shares were down 1 percent, and one analyst said P&G needs to show sales can grow faster to lift shares. “We believe a sustained acceleration in organic growth toward the upper end of the 3 percent-4 percent range is necessary for material upside to the stock,” said Oppenheimer & Co analyst Joseph Altobello in a research note.
Organic sales in P&G’s fabric care and home care division, which generates almost one third of sales, rose 6 percent. Brands in that category include Tide, Febreze air freshener and Duracell batteries.
Grooming, its most profitable business, saw sales rise 1 percent. P&G’s struggling beauty division, which includes Head & Shoulders and Olay, improved, with sales up 2 percent.
P&G has been under pressure to launch innovative products and streamline its businesses to focus on its core products. Two weeks ago, P&G said it was is selling the bulk of its pet food business to Mars Inc for $2.9 billion. [ID:nL3N0N13IT]
“We’re operating in a slow-growth, highly competitive environment,” Chief Executive A.G. Lafley said in a statement.
Under a 5-year, $10 billion restructuring plan announced in February 2012, P&G has sought to cut expenses by streamlining management, lower overhead costs and lower marketing costs. Chief Financial Officer Jon Moeller told reporters on a call that restructuring was running ahead of schedule.
The maker of Pampers diapers and Tide detergent earned $2.61 billion, or $0.90 per share, in the fiscal third quarter ended March 31, up slightly from $2.57 billion, or $0.88 per share, a year earlier.
Core earnings per share, excluding restructuring charges, rose 5 percent to $1.04, 3 cents better than expected, according to Thomson Reuters I/B/E/S.
P&G left its fiscal 2014 forecasts unchanged. It still expects organic sales to rise 3 percent to 4 percent, and core earnings to rise 5 percent to 7 percent.
P&G Graphic: link.reuters.com/jyc78v
Reporting by Phil Wahba in New York, Editing by Franklin Paul and Sofina Mirza-Reid
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