Weak developed markets, pricing woes hurt P&G

(Reuters) - Procter & Gamble Co cut its profit outlook for the year on Friday as weakness in developed markets, more attractive pricing by competitors, and the need to slash prices in Venezuela pressured margins as it overhauled its business.

The world's largest household products maker also continues to feel the pinch of higher costs for commodities such as diesel fuel, alcohol and chemicals, and is working on a new restructuring plan.

Shares of P&G, which makes Pampers diapers and Gillette razors, fell 3.2 percent to $64.75 on the New York Stock Exchange.

Many analysts were frustrated that the company's restructuring wasn't yielding results fast enough, as P&G continued to underperform its peers.

"Where is the taking responsibility for the weak numbers, as opposed to saying 'not our fault, it's just really tough out there'?" Citigroup analyst Wendy Nicholson said on a conference call.

P&G Chief Executive Bob McDonald said that as CEO, he took responsibility. But the admission didn't satisfy analysts.

"How long do you expect investors to wait? How long does your current plan have to work? How much patience does the board have?" asked Sanford Bernstein analyst Ali Dibadj.

McDonald, who became CEO in July 2009, said the company has not innovated enough in certain areas, particularly beauty care in the United States. More broadly, he blamed flat volume growth in the categories where P&G competes.

"The CEOs I talk to basically say that they see a decelerating trend," McDonald told reporters. Much of the growth in developed markets "will be share growth, because the markets aren't growing," he said.

P&G, like many other household products makers, has raised prices to mitigate the impact of higher commodity costs.

The company rolled out $3.5 billion worth of price increases this year, but about $100 million to $200 million of them didn't stick as competitors didn't match them, Chief Financial Officer Jon Moeller said on the call.

Now P&G is rescinding some of the increases, either by lowering prices, or keeping them unchanged while increasing the size of the products. The rollbacks are coming in laundry detergent in the United States, Britain and Mexico, and North American oral care, dishwasher detergent, and blades and razors.

In Venezuela, where P&G sales are worth an annual $1 billion, new regulations forced P&G to cut prices by as much as 25 percent, Moeller said.


Earnings fell to $2.41 billion, or 82 cents per share, in the third quarter through March, from $2.87 billion, or 96 cents per share, a year earlier.

The company took charges for its restructuring, which involves cutting 5,700 nonmanufacturing jobs and $10 billion in costs by the end of fiscal 2016.

Core earnings per share, which excludes items such as restructuring charges, were flat at 94 cents. The results topped analysts' expectations of 93 cents, according to Thomson Reuters I/B/E/S. Sales grew 2 percent to $20.19 billion.

The results came a day after rival Colgate-Palmolive Co's quarterly profit met analysts' expectations, with sales that rose slightly more than Wall Street expected.

P&G said it now expects core earnings per share of $3.82 to $3.88 this year, on sales growth of 4 percent. Back in February, it had forecast $3.93 to $4.03 for the year ending in June.

Analysts were expecting full-year profit of $3.96 per share.

P&G expects to earn 79 cents to 85 cents per share in the current quarter. It forecasts 1 percent to 2 percent sales growth and said organic sales, which strip out the impact of deals and currency, should rise 4 percent to 5 percent.

P&G outlined its restructuring plan in February.

(Reporting by Jessica Wohl in Chicago and Martinne Geller in New York; Editing by Lisa Von Ahn and Bernadette Baum)

  • Peeling out at Octane Academy, the free driving school for Ford ST owners 24 minutes ago
    Peeling out at Octane Academy, the free driving school for Ford ST owners

    Buyers of Ferraris or Jaguars are used to perks from manufacturers – including racetrack lessons to help master their exotic machines. But for enthusiasts on a tighter budget, the Ford ST Octane Academy might be the sweetest deal in motoring: Buy a Ford Fiesta ST or Focus ST hatchback, and the reward is a free day of training at one of America’s longest, most-lavish road courses.

  • Why you can't buy America's greenest car 3 hours ago
    Why you can't buy America's greenest car

    Ask me or any auto expert what's the fastest car you can buy for any given amount, and we could easily cough up several options. Same for most luxurious, or off-roadable, or any other measurement. Yet there's one type of question that's far harder to answer: What's the greenest, most environmentally friendly car you can buy today?

  • Audi TT Offroad concept debuts as a 124-mpg hybrid with wireless charging 4 hours ago
    Audi TT Offroad concept debuts as a 124-mpg hybrid with wireless charging

    The TT. Audi's diminutive sports car. Since production began in 1998, the two-door coupe has aged with the pugnacity of a grizzled New Yorker, but not in size. And why would it, as the arrival of the TT RS proved, adding some grit makes for a rather captivating dish. And so you'll excuse us for being puzzled by the Audi TT Offroad concept.

  • Pirates kidnap three on Singapore tanker off Malaysia
    Pirates kidnap three on Singapore tanker off Malaysia

    Armed pirates boarded a Singapore-managed oil tanker in the Strait of Malacca, kidnapping three Indonesian crew and stealing some of the vessel's shipment of diesel fuel, the International Maritime Bureau said Wednesday. The attack occurred early Tuesday off Malaysia's west coast, said Noel Choong, head of IMB's Kuala Lumpur-based piracy reporting centre. The diesel oil tanker was believed to be en route to Myanmar. "IMB is aware of the attack on the Singapore-managed ship in the Malacca Straits.

  • McDonald's Hello Kitty sale site temporarily suspended due to fresh wave of Kitty mania
    McDonald's Hello Kitty sale site temporarily suspended due to fresh wave of Kitty mania

    It may not be safe to enter a McDonald’s restaurant in Singapore on Mondays starting 28 April. To celebrate the iconic Japanese character Hello Kitty’s 40th anniversary, the fast food chain announced last Friday that it would be releasing a new collection of Hello Kitty toys in McDonald’s restaurants island wide next Monday.

  • First sign of S.Korea ferry disaster was call from a frightened boy
    First sign of S.Korea ferry disaster was call from a frightened boy

    He called the emergency 119 number which put him through to the fire service, which in turn forwarded him to the coastguard two minutes later. That was followed by about 20 other calls from children on board the ship to the emergency number, a fire service officer told Reuters.