Procter & Gamble Co. (PG: Quote) trimmed its fourth-quarter earnings forecast Wednesday, citing slower than anticipated top-line growth in developed regions and negative foreign currency impact. The consumer goods giant cautioned that unfavorable currency will also affect its earnings growth for the next fiscal year.
Providing an overview on its strategic focus areas, the company noted that it is prioritizing investments in its 'biggest' most profitable markets, innovations and emerging countries. It also aims to maintain strong investment levels in markets it has recently entered.
At the Deutsche Bank Global Consumer Conference in Paris, P&G's Chairman, President and Chief Executive Officer Bob McDonald said the company expects to increase focus on its core business and to achieve more balanced growth.
For the fiscal fourth quarter ending June 30, the Cincinnati, Ohio-based maker of Tide detergents, Crest toothpaste and Gillette shaving razors expects net earnings to be in the range of $1.17 to $1.26 per share, lower than the prior guidance range of $1.21 to $1.32. The outlook includes a gain of $0.47 to $0.50 per share stemming from the $2.7 billion sale of its Pringles snack business to cereal maker Kellogg Co. (K).
Core earnings per share, which excludes one-time items, are now expected to range between $0.75 and $0.79, compared to the previous forecast of $0.79 to $0.85. The revised core earnings forecast represents a decline of 4 to 9 percent from last year. On average, 23 analysts polled by Thomson Reuters expect the company to earn $0.82 per share in the quarter. Such estimates typically exclude special items.
For the quarter, net sales are now expected to decline by 1 to 2 percent, while earlier, the company expected an increase of 1 to 2 percent. Foreign exchange is expected to reduce net sales by 4 percent.
On an organic basis, excluding the impacts of acquisitions, divestitures and foreign exchange, sales is expected to grow in the range of 2 to 3 percent, compared to the prior range of 4 to 5 percent.
Reporting a lower third-quarter profit back in April, the company trimmed its core earnings guidance for the year ending this June to a range between $3.82 and $3.88 per share. Analysts currently project earnings of $3.86 per share for the fiscal year 2012. Net sales are expected to grow 4 percent.
For the next fiscal year starting July, the company now expects core earnings per share to be in-line with last year or up mid-single digits and organic sales to increase in the range of 2 to 4 percent. Excluding negative foreign exchange impact, core earnings per share is expected to grow about mid-to-high single digit percentage.
The detergent maker expects to improve results by driving productivity improvements and cost savings at an accelerated pace. P&G reiterated its objective to deliver $10 billion in cost savings by the end of fiscal year 2016, which includes a reduction of about 5,700 non-manufacturing roles by the end of fiscal year 2013.
P&G shares closed Tuesday's regular trading session at $62.21, down $0.08 or 0.13 percent.
In pre-market activity, shares are currently losing $1.21 or 1.95 percent, and trading at $61.
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by RTT Staff Writer
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