Consumer goods giant Procter & Gamble Co. (PG) reported Wednesday a profit for the third quarter that grew 6 percent from last year, reflecting improved margins amid increased focus on productivity and cost savings as well as sales growth. Core earnings per share topped analysts' expectations by three cents, while quarterly revenues missed their estimates by a whisker.
The company also provided core earnings guidance for the fourth quarter, below Street view, while raising the low-end of its core earnings guidance range for the full-year 2013, citing strong productivity improvement and resulting cost savings.
The company noted that it increased the quarterly dividend by seven percent earlier in the month and also raised its share repurchase target to about $6 billion of stock for the fiscal year 2013.
"We delivered another quarter of steady progress. Top-line growth was in line with our expectations. Market shares improved broadly. Strong cost savings enabled us to exceed our outlook on the bottom line," Chairman, President and CEO Bob McDonald said in a statement.
The Cincinnati, Ohio-based maker of Tide detergents, Crest toothpaste and Gillette shaving razors reported net earnings of $2.57 billion or $0.88 per share for the third quarter, higher than $2.41 billion or $0.82 in the prior-year quarter.
Net earnings from continuing operations grew to $2.59 billion or $0.88 per share from $2.43 billion or $0.81 per share in the year-ago quarter.
The company said core earnings from continuing operations, which excludes certain items, was $0.99 per share, compared to last year's $0.94 per share. On average, 24 analysts polled by Thomson Reuters expected the company to report earnings of $0.96 per share for the third quarter. Analysts' estimates typically exclude special items.
Sales for the quarter grew two percent to $20.60 billion from last year's $20.19 billion, but missed nineteen Wall Street analysts' consensus estimate of $20.74 billion by a whisker. Foreign exchange reduced net sales by 1 percent. Organic sales grew three percent.
Beauty care net sales decreased 2 percent to $4.76 billion, grooming net sales also declined 2 percent to $1.93 billion, while health care net sales grew 8 percent to $3.27 billion from last year. Fabric care and home care net sales remained flat with last year at $6.59 billion, while baby care and family care net sales increased 3 percent to $4.28 billion from a year ago.
"We expect further top-line improvement in the fourth quarter, driven by innovation and portfolio expansion, enabled by continued productivity improvement," McDonald added.
The productivity improvements are part of the company's growth and productivity plan announced in February 2012 that targets productivity and cost savings of about $10 billion by 2016. P&G targets saving about $8 billion through cost reductions and $2 billion through cost control & leverage.
Looking ahead to the fourth quarter, P&G expects core earnings in a range of $0.69 to $0.77 per share, on a projected net sales growth of 1 to 2 percent, with organic sales growth estimated at 3 to 4 percent. Analysts are now looking for earnings of $0.81 per share for the quarter, on revenues of $20.97 billion.
For fiscal 2013, the company raised its low-end of the core earnings outlook range by $0.02 to now be at $3.96 to $4.04 per share, with sales projected to grow 1 to 2 percent from last year.Meanwhile, P&G is maintaining its organic sales growth guidance of 3 to 4 percent.
Street is currently looking for full-year 2013 earnings of $4.05 per share, on annual revenues of $84.66 billion.
PG closed Wednesday's regular trading session at $82.54, up $1.08 on a volume of 12.68 million shares. In the past 52-week period, the stock has been trading in a range of $59.07 to $81.70.
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