P&G Cuts 2012 Profit Forecast on Currency Exchange Rates
P&G Cuts Full-Year Profit Forecast
David Paul Morris/Bloomberg
Rolls of Bounty paper towels are arranged for a photograph in San Francisco.
Rolls of Bounty paper towels are arranged for a photograph in San Francisco. Photographer: David Paul Morris/Bloomberg
Procter & Gamble Co., the world’s largest consumer-products company, reduced its full-year earnings forecast as the strength in the U.S. dollar hurts sales generated abroad.
Adjusted earnings per share for 2012 will be as much as $4.10, compared with a previous projection of a maximum of $4.33, the Cincinnati-based company said today in a statement. Analysts had projected $4.17 a share, the average of 21 estimates compiled by Bloomberg.
P&G’s forecast follows rival Kimberly-Clark Corp. (KMB), which also this week projected full-year earnings that trailed analysts’ estimates, citing a foreign currency “headwind” and difficult economic conditions. Household-products makers are facing lower birthrates and U.S. consumers pinched by a housing slump and unemployment that averaged 9 percent last year.
P&G, the maker of Pampers diapers and Gillette razors, fell 0.8 percent to $64.30 at the close in New York. The shares rose 3.7 percent last year.
Strength in the dollar will hurt the value of revenue generated overseas when it’s converted to U.S. currency. The company said sales from developing markets are expected to make up 37 percent of revenue this year, up from 35 percent in 2011.
The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, has gained 6.3 percent since the end of August.
Increased Prices
Chief Executive Officer Robert McDonald said on a media conference call today that the company’s increased prices hurt market share last quarter. P&G has been raising prices across all divisions and regions to help make up for higher costs for commodities, which McDonald said will have “easier” comparisons in the next two quarters.
Net income in the fiscal second quarter declined 49 percent to $1.69 billion, or 57 cents a share, from $3.33 billion, or $1.11, a year earlier, the company said. P&G incurred a non-cash expense of $1.5 billion, or 50 cents a share, to adjust the carrying value of goodwill in its Appliances and Salon business, according to the statement.
Adjusted earnings per share totaled $1.10, the company said. Analysts projected $1.08 a share, excluding some costs, the average of 19 estimates compiled by Bloomberg. Sales rose 3.7 percent to $22.1 billion.
Newell Results
Newell Rubbermaid Inc. (NWL) also said foreign exchange will restrain 2012 profit. Currency effects will trim 4 to 5 cents a share from profits this year, Chief Executive Officer Mike Polk said on a conference call today.
Newell, based in Atlanta, said fourth-quarter net income rose to $80.4 million, or 27 cents a share, from $75.7 million, or 25 cents, a year earlier, according to a statement today. Excluding a 12-cent charge for restructuring in Europe, Newell earned 40 cents a share, beating the average Bloomberg estimate of 38 cents.
The company forecast 2012 adjusted profit of $1.63 to $1.69 a share. Analysts surveyed by Bloomberg projected $1.69, the average of 11 estimates.
Newell rose 8 percent, the most in three months, to $18.82 at the close in New York.
Newell’s baby and parenting unit posted a 4.5 percent sales gain, led by a 20 percent increase in Asia and demand for its high-end Aprica brand there, Polk said today in a telephone interview. Sales for the unit fell 12 percent in the first half of last year, hurt by low birthrates, he said. Polk joined the company in July from Unilever NV.
“It’s too early to say” whether consumer spending will pick up in the U.S., Polk said, leading him to be conservative with the company’s planning. More than two-thirds of Newell’s sales came from the U.S. in 2010.
To contact the reporter on this story: Lauren Coleman-Lochner in New York at llochner@bloomberg.net
To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net
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