Oct. 30 (Bloomberg) -- Procter & Gamble Co., the largest U.S. consumer-goods maker, forecast full-year profit that trailed analysts' estimates on slowing U.S. consumer spending and higher commodity expenses.

The shares fell the most in eight months even as the company reported a 14 percent increase in first-quarter profit.

Sales rose 7.5 percent to $20.2 billion, missing analysts' estimates of $20.3 billion, the maker of Tide laundry detergent said today. A weaker dollar accounted for 3 percentage points of the increase.

``People were setting up for a better quarter because of the tailwind from the weaker dollar,'' said Walter Todd, a principal in Greenwood Capital Associates LLC which owns 186,000 P&G shares. ``It was mildly disappointing.''

P&G, which gets 58 percent of its revenue from overseas, has expanded sales of the Gillette Fusion razor in Russia and Pampers diapers in India to counter slowing growth in the U.S., where spending has weakened in the face of higher food, fuel and housing costs.

``There is more pressure on lower-income consumers than there is on middle- and upper-income consumers,'' Chief Executive Officer A.G. Lafley told analysts on a conference call today.

Increased costs to make smaller Tide detergent bottles and higher energy prices will hurt margins in the second quarter, P&G said. Price increases on Downy fabric softener and Folgers coffee will improve profit during the rest of the year.

Net income climbed to $3.08 billion, or 92 cents a share, compared with $2.7 billion, or 79 cents, a year earlier, Cincinnati-based P&G said in a statement.

Share Performance

P&G, which also makes Charmin toilet paper, dropped $2.88, or 4 percent, to $68.95 at 4:28 p.m. in New York Stock Exchange composite trading. The stock has advanced 16 percent since P&G bought razor maker Gillette Co. in 2005, less than the 25 percent gain by the Standard & Poor's 500 Index.

Second-quarter profit will be between 95 cents and 97 cents a share. Analysts surveyed by Bloomberg had estimated 97 cents.

P&G increased its 2008 profit forecast to $3.46 to $3.49 a share to reflect a 2-cent tax benefit. The weaker dollar will add 3 percentage points to sales and will help revenue climb as much as 8 percent, the company said. P&G previously had forecast a sales gain of at most 7 percent.

Analysts surveyed by Bloomberg were estimating average profit of $3.47 a share excluding the benefit.

Analysts' Estimates

Excluding the 2-cent-a-share tax benefit, P&G earned 90 cents in the three months that ended Sept. 30, matching the average estimate of 16 analysts surveyed by Bloomberg. Ten projected sales of $20.3 billion.

P&G's U.S. sales growth experienced ``a slight slowdown'' in the third quarter, Chief Financial Officer Clayton Daley told analysts today on a conference call. Growth in developing markets is ``on track,'' he said.

P&G's biggest customer, Wal-Mart Stores Inc., accounts for about 15 percent of the company's revenue. Wal-Mart, the world's largest retailer, cut prices on 15,000 items earlier this month to spur sales before the holidays.

Twenty-seven percent of P&G's revenue comes from emerging markets, which may grow faster than 10 percent annually, Jason Gere, a Wachovia Capital Markets LLC analyst in New York, wrote Oct. 24. He rates the stock as ``outperform.''

International Shift

``It's moving more and more internationally,'' said Donald Yacktman, who oversees $1.1 billion at Yacktman Asset Management in Austin, Texas. The firm managed 566,947 P&G shares through June.

The dollar weakened 5.9 percent for the quarter ended Sept. 30 against a basket of major currencies compared with a year earlier. The weakening dollar lifts the value of overseas sales when translated from foreign currencies.

P&G has expanded sales of the Fusion razor to western Europe, Asia and Russia since introducing the product in the U.S. in January 2006. This year, the razor will become P&G's 24th brand with annual sales exceeding $1 billion, Lafley told shareholders earlier this month.

To contact the reporter on this story: Chris Burritt in Greensboro, North Carolina at cburritt@bloomberg.net.

Last Updated: October 30, 2007 16:38 EDT