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Procter & Gamble Profit Jumps 33% PDF Print E-mail
Thursday, 07 August 2008

AP, CINCINNATI -- The Procter & Gamble Co. credited the strength of its household brands Tuesday as it reported a fourth-quarter profit that soared 33 percent, helped by price increases, overseas sales and tax benefits.

The maker of Tide detergent, Gillette shavers and Pampers diapers said it earned $3.02 billion, or 92 cents per share, up from $2.27 billion, or 67 cents per share, a year earlier. Excluding tax benefits, P&G earned 80 cents per share.

Analysts surveyed by Thomson Financial expected 78 cents per share.

The Cincinnati-based consumer products company said revenue jumped to $21.27 billion from $19.27 billion for the quarter, topping analyst expectations for $21.05 billion.

P&G, which has been raising prices to offset rising energy and raw materials costs, also cited favorable foreign exchange rates and double-digit sales growth in emerging markets. For its full fiscal year, sales rose 9 percent to $83.5 billion.

The company has already raised prices this year on products such as Iams dog food, Cascade dishwasher detergent and Oral-B power toothbrushes, and has more hikes planned in September for Gillette shaving cream, Dawn dishwashing liquid and other items. P&G officials are counting on consumer loyalty to counter household budget-tightening.

A.G. Lafley, the company's chairman and CEO, said P&G's product portfolio, which includes 24 brands with at least $1 billion in annual sales, and continued improvements and new products will help sustain growth.

''Innovation is what will differentiate the winners and the losers in our industry and in the current environment,'' Lafley told analysts on a conference call. ''Innovation drives consumer value and builds brand equity and trust over time.''

Lafley said P&G sales are strong in countries such as China, Russia, Poland, Turkey and Saudi Arabia, and the company sees good opportunities for more growth in emerging markets.

Oppenheimer & Co. analyst Joseph Altobello noted that P&G was able to top analysts' estimates while battling the impacts of higher commodity and energy costs.

''Bottom line: P&G is managing through cost pressures, businesses remain healthy, and we would continue to be buyers,'' Altobello wrote Tuesday.

P&G shares gained $1.56, or 2.4 percent, to $67.38, in morning trading Tuesday. They have traded in a 52-week range of $60.05 to $75.18.

The company expects 2009 adjusted profit of $3.80 to $3.87 per share, lifting the upper end of its range by 2 cents from earlier guidance. That doesn't include an expected 50-cents-per-share gain after the sale of its Folgers coffee business to J.M. Smucker Co., less an expected 12 cents per share for restructuring costs.

Analysts were projecting $3.85, or $3.94 per share fully reported, on sales of $88.4 billion. P&G expects total sales for the year to increase 5 percent to 7 percent, implying sales of $87.68 billion to $89.35 billion.

For the July-September quarter that begins its fiscal year, P&G projects earnings per share of 98 cents to $1. Analysts are expecting earnings of $1 a share on sales of $21.69 billion. P&G projects sales to increase 7 percent to 10 percent, implying sales of $21.65 billion to $22.25 billion.

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