P&G says net income fell 7 percent

By Dan Sewell

Associated Press

Published: Wednesday, Oct. 27 2010 7:34 a.m. MDT

CINCINNATI — Procter & Gamble Co. says sales of its diapers, shavers and toothpaste increased around the globe in the first quarter, but its net income fell 7 percent after the sale of its prescription drug business.

The Cincinnati-based world's largest consumer products company says net income was $3.08 billion, or $1.02 per share, down from $3.3 billion, or $1.06 a year ago. Sales rose nearly 2 percent to $20.1 billion.

Analysts surveyed by Thomson Reuters expected, on average, $1 per share on revenue of $20.2 billion for the July-September quarter.

P&G last October sold its pharmaceutical business for $3.1 billion to Warner Chilcott PLC, part of its strategy to focus on products with the best growth and profit prospects.

Organic sales, a key measure that excludes the impacts of acquisitions, divestitures and currency changes, rose 4 percent in the quarter.

P&G has stepped up marketing and innovation, and rolled out lower-priced product versions to keep budget-watching shoppers buying its big-name brands such as Pampers diapers and Tide laundry detergent.

P&G said it increased market share across regions. It added that 17 of its 23 brands with at least $1 billion in annual sales also increased share.

Bob McDonald, CEO and chairman, called it a solid start to the company's fiscal year, while still facing a challenging economy with cautious consumers "in the sense that demand is dampened." He said the U.S. and other developed markets such as western Europe and Japan grew little, while sales growth was better in China and other emerging economies.

"We aren't going to make any excuses for the macroenvironment like the one we're in," McDonald told reporters on a conference call. "We see it as an opportunity to continue to invest and grow market share profitably."

While P&G still sees some shoppers trading down to lower-priced products, McDonald said sales of the new Gillete Fusion ProGlide, introduced in June, were strong despite its 15 percent higher price, and that the midpriced Gain dishwashing liquid also had a strong summer rollout.

The company reported good sales growth for Pantene and Head & Shoulders shampoos, while Olay, Venus and Safeguard women's beauty lines also grew. Sales of higher-priced salon and prestige products fell, P&G said.

Pet care sales fell, while Pringles snack sales increased.

The company expects earnings per share for the full year of $3.91 to $4.01, and says the current quarter should produce earnings per shares of $1.05 to $1.11, with organic sales growth of 3 to 5 percent.

Analysts are expecting full-year earnings per share of $3.97, and $1.11 for the quarter.

Shares rose 64 cents to $63.50 in premarket trading.

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