By Paul Ziobro
Procter & Gamble Co. said demand in emerging markets remains
strong, a counterpoint to concerns that have roiled investors this
week and led rival Unilever PLC to warn of weak sales growth
ahead.
The maker of Gillette razors and Pampers diapers said sales in
countries such as China and Brazil grew 8% excluding currency
movements in the quarter ended Dec. 31 and continue to grow at
about that pace. Markets have slowed down a bit overall for the
company, but P&G said developing countries aren't a particular
problem.
"There continues to be very strong growth overall, between 7%
and 8% in the quarter we just completed from a market standpoint,
and we expect that to continue," P&G Chief Financial Officer
Jon Moeller said on a conference call with analysts Friday.
P&G's tone, which came as it reported a 3% increase in core
sales that pleased investors, contrasted sharply with that of
Unilever. The European company blamed weakness in emerging-market
currencies in September when it issued its first profit warning in
almost a decade and warned earlier this week that weak conditions
would persist in both developed and developing economies.
Unilever, which makes Axe deodorant and Dove soap, is much more
tied to the fates of emerging markets than P&G. The company
gets close to 60% of its sales from China, India and other emerging
markets, compared with just 39% for P&G.
The two consumer-products giants spoke against a backdrop of
concerns about the stability of emerging markets that has roiled
investors this week. Currencies in countries such as Turkey and
South Africa reached fresh lows Friday, and the Indian rupee fell
as well. The Dow Jones Industrial Average closed down 318 point
Friday -- its sharpest one-day decline since June 20 -- after
falling 176 points Thursday.
Investors are jittery as the Federal Reserve backs away from the
bond-buying program it has used to help stimulate the economy. Weak
manufacturing data out of China this week inflamed those
concerns.
Kimberly-Clark Corp. also said Friday that its emerging-markets
business continues to grow strongly, with expectations that growth
excluding acquisitions, divestitures and currencies will rise at a
high-single-digit rate for the current year. The maker of Huggies
diapers and Kleenex tissues said its profit more than doubled in
the last quarter of 2013 compared with a year earlier, as organic
sale rose 5%.
P&G's shares closed up 1.2% Friday at $79.20. Kimberly-Clark
was up 2% at $107.44.
P&G reported a 16% drop in profit for the quarter ended Dec.
31, largely due to unfavorable exchange rates. A year earlier,
P&G recorded a benefit from buying out a joint-venture partner
in Europe. Stripping out those items, the company's earnings were
in line with Wall Street's expectations, as was its 3% growth in
sales excluding acquisitions, divestitures and currencies, a figure
buoyed by the strong growth in emerging markets. The company also
backed its outlook for the year.
The company did continue to struggle with its beauty business,
the only one of its major lines not to post sales growth in the
quarter. The company is battling with Unilever in the shampoo
aisle, where this week each company accused the other of aggressive
discounting.
Kimberly-Clark, meanwhile, suffered some slowdown in China.
Diaper sales there rose in the low-20% range, down from around 35%
on average last year. But Chief Executive Tom Falk said that growth
rate is "still pretty healthy relative to everywhere else in the
world."
In another area of the business world entirely, industrial
conglomerate Honeywell International Inc. also addressed concerns
about China on Friday after reporting its profit nearly quadrupled
as sales rose 8.4% to $10.39 billion. Chief Executive David Cote
cast doubt on the troubling industrial production data out of
China, where the company posted organic sales growth of 13%.
"I'm not sure always how reliable all the statistics are," Mr.
Cote said.
Kate Linebaugh and Anna Prior contributed to this article.
Write to Paul Ziobro at Paul.Ziobro@wsj.com
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