By Chelsey Dulaney
Procter & Gamble Co. warned Tuesday that its efforts to slim
down and speed sales growth by shedding brands are being
overshadowed by "unprecedented currency devaluations."
"Virtually every currency in the world devalued versus the U.S.
dollar, with the Russian Ruble leading the way," said Chief
Executive A.G. Lafley in a news release. "While we continue to make
steady progress on the strategic transformation of the
company...the considerable business portfolio, product innovation,
and productivity progress was not enough to overcome foreign
exchange."
P&G said it expects currency volatility to reduce its sales
for the year ending in June by 5% and profit by 12%.
The warning came as P&G reported results in its December
quarter that missed expectations, as sales fell across all of its
divisions as foreign exchange impacts weighed heavily.
The comments about currency impacts echo those made in recent
days by United Technologies Inc., DuPont Co. and Pfizer Inc., all
of which gave disappointing outlooks.
P&G shares fell 2.4% in premarket trading.
The company is planning to shed up to 100 of its brands as it
focuses its resources on 70 to 80 of its higher-growth brands. It
agreed in November to sell its billion-dollar Duracell battery
business to Warren Buffett's Berkshire Hathaway Inc.
The company said at the time that it was close to the sale of
another 10 small brands, with information packets in the hands of
potential buyers. In December, P&G agreed to sell its Camay and
Zest soap brands to Unilever PLC.
Overall, P&G posted a profit of $2.37 billion, or 82 cents a
share, down from $3.43 billion, or $1.18 share, a year earlier.
Excluding items, per-share earnings were $1.06.
Revenue dropped 4.4% to $20.16 billion.
Analysts polled by Thomson Reuters had expected per-share
earnings of $1.13 on revenue of $20.62 billion.
Excluding a hit from foreign exchange rates, P&G's sales
increased 2%.
The company's gross profit margin narrowed to 50% from 50.4%,
continuing a steak of declines.
Overall unit volume was flat in the quarter, with volume down 2%
in its beauty and personal care, grooming and health care units.
The fabric segment posted a 2% increase.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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