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P&G Profit May Top Analysts’ Estimates on India Gains

Procter & Gamble Co.'s Tide laundry detergent sits on the shelf at a supermarket in New York on Dec. 11, 2009. Photographer: Jin Lee/Bloomberg
Procter & Gamble Co.'s Tide laundry detergent sits on the shelf at a supermarket in New York on Dec. 11, 2009. Photographer: Jin Lee/Bloomberg

April 28 (Bloomberg) -- Procter & Gamble Co., the world’s largest consumer-products company, may report third-quarter profit that exceeded analysts’ estimates, boosted by growth in emerging markets and a drop in raw material costs.

P&G may have earned as much as 89 cents in the quarter ended March 31, according to Ali Dibadj, an analyst with Sanford C. Bernstein & Co. in New York. On average, analysts predict 82 cents, based on 14 estimates compiled by Bloomberg.

The quarter marked the second time since P&G’s 2005 takeover of Gillette that it has benefited from foreign-exchange rates and lower prices for commodities including pulp in the same period, according to Dibadj. Developing markets such as China and India, where P&G introduced a low-cost Tide detergent, helped mitigate results in the U.S. and western Europe, said Evan Mancer, an analyst at Cardinal Capital Management Inc.

“The majority of growth has come from emerging markets,” Mancer said. “Asia in general has been really strong and I think that’s going to come through with P&G’s numbers.”

Mancer said he expects P&G’s earnings to top analysts’ estimates, although he doesn’t calculate his own predictions. Cardinal Capital, based in Winnipeg, Manitoba, manages $1.2 billion in assets including P&G stock.

Jennifer Chelune, a P&G spokeswoman, declined to comment before the earnings release, scheduled for tomorrow.

P&G has met or exceeded profit estimates in all but two quarters in at least four years, Bloomberg data show.

The Cincinnati-based company said in January that third-quarter earnings would decline compared with a year earlier because it was investing in new products. Earnings may fall as much as 8 percent to 77 cents to 82 cents a share, P&G said then.

P&G Shares

P&G rose 6 cents to $63.17 at 4 p.m. in New York Stock Exchange composite trading, as it began trading without the right for shareholders to receive its 48-cent dividend. The shares have advanced 4.2 percent this year, compared with a 6.8 percent increase in the Standard & Poor’s 500 Index.

In January, the company forecast a sales increase of 7 percent to 10 percent in the quarter, with as much as 4 percent coming from favorable currency rates. Bernstein’s Dibadj, who rates the stock “market perform,” estimates a 4 percent gain from foreign exchanges, and Joe Altobello, a New York-based analyst with Oppenheimer & Co., a 3 percent gain. Currency swings cut P&G sales by 9 percent in the year-earlier quarter.

“You’ve got to believe they can grow pretty substantially,” Dibadj said in a telephone interview.

Chief Executive Officer Bob McDonald said in February P&G is introducing the “strongest” lineup of products and features in his 30 year-career at the company. That includes the Fusion ProGlide razor in June, with a blade 15 percent thinner than Fusion’s, and Pampers Simply Dry, a lower-priced version of the diaper.

Developing Markets

P&G gets about a third of revenue from developing markets, where sales have grown an average of 11 percent in the past two years. Sales in North America and Western Europe have declined 1.5 percent and 2.6 percent over the same period, Bloomberg data show.

A weaker U.S. dollar increases the value of P&G’s overseas revenue. The dollar fell against the basket of major world currencies in the 12 months ended March 31, Bloomberg data show.

The price of pulp used in Bounty Paper towels and Charmin bath tissue fell 13 percent in the 12 months before Sept. 30, 2009. There is a lag between the time a company buys raw materials and it ships a finished product.

In India, P&G lowered prices to gain market share from Unilever, the second-largest consumer-products company, Dibadj said in an April 13 note. P&G cut prices on diapers, shampoo and laundry products, and started selling low-cost versions of Gillette razors and Tide, Dibadj wrote.

Unilever, the market leader in laundry detergents in India, followed by cutting the price of its Rin and Surf brands by as much as 30 percent, he wrote.

P&G’s share in India rose to 5.9 percent last year from 3.7 percent in 2004, according to Dibadj. Unilever, based in London and Rotterdam, has 27 percent of the market.

To contact the reporter on this story: Mark Clothier in Southfield, Michigan, at

To contact the editor responsible for this story: Jennifer Sondag at

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