Consumer goods giant Procter & Gamble Co. (PG) on Friday said its second-quarter profit declined 49 percent from last year, weighed down by a hefty impairment charge. Adjusted earnings fell from last year due to higher commodity costs, but topped Wall Street estimates. Further, the company issued third-quarter earnings outlook below view and cut its full-year profit forecast, citing adverse currency impact.
The results were similar to that of peer Colgate-Palmolive Co. (CL), which reported Thursday a lower December-quarter profit and warned of currency translation affecting its fiscal 2012 profit.
Procter & Gamble's second quarter net earnings attributable to the company fell to $1.69 billion or $0.57 per share from $3.33 billion or $1.11 per share in the prior year and $3.02 billion or $1.03 per share in the preceding first quarter.
The company incurred non-core charges of $0.53 per share in the just concluded quarter, including a $0.50 per share non-cash impairment charge associated with the Appliances and Salon Professional businesses.
Core net earnings per share, which excludes special items, dropped to $1.10 from $1.13 per share earned last year, as benefits from sales growth and cost savings were more than offset by higher commodity costs. On average, 21 analysts polled by Thomson Reuters expected earnings per share of $1.08. Analysts' estimates typically exclude one-time items.
Net sales for the quarter grew 4 percent to $22.14 billion from $21.35 billion in the prior year and $21.92 billion in the previous quarter. Analysts estimated revenues of $22.19 billion for the quarter.
The sales growth was driven by higher volume and pricing actions, partially offset by geographic and product mix.
Organic sales also grew 4 percent, with all six business segments growing for the second consecutive quarter.
Segment-wise, Baby Care and Family Care net sales increased six percent to $4.2 billion, driven by increased pricing. Net sales in Beauty and Grooming segments as well as healthcare edged up 1 percent each.
Snacks and Pet Care sales advanced 3 percent, while Fabric Care and Home Care segment increased net sales by five percent from last year.
Looking ahead, Chief Executive Officer Bob McDonald said, "With the easing of commodity cost comparisons over the next two quarters, continued solid top-line growth and cost savings progress, we expect operating profit growth to accelerate in the second half of the fiscal year."
The company expects third-quarter net earnings will continue to be hurt by higher commodity costs compared to prior year levels. The company also expects the effective tax rate to be significantly higher from last year.
Against this backdrop, core earnings for the third quarter are expected to be in the range of $0.91 to $0.97 per share, while analysts expect earnings in the range of $1 to $1.12 per share.
Net earnings per share are projected to be between $0.81 and $0.87. Net sales growth is estimated to be in line with last year to up two percent.
For fiscal year 2012, the company now expects core earnings in the range of $4 to $4.10 per share, down from its previous projection of $4.15 to $4.33 per share, primarily due to negative foreign exchange impact. Net earnings per share are estimated to vary between $3.85 and $4.08. Net sales are expected to increase three to four percent in fiscal 2012.
Wall Street sees full year earnings in the range of $4.04 to $4.28 per share.
PG closed on Thursday at $64.80, down from the previous close of $64.98, on 11.93 million shares.
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