P&G Profit Tops Estimates as Lafley Takes Over

Procter & Gamble Co. posted fourth-quarter profit that topped analysts’ estimates, giving Chief Executive Officer A.G. Lafley some breathing room as he works to turn around the company he rejoined two months ago.

Net income slid 48 percent to $1.88 billion, or 64 cents a share, from a year earlier, when Cincinnati-based P&G benefited from the sale of the Pringles business. Excluding items such as restructuring costs, profit was 79 cents a share, P&G said today in a statement. Analysts estimated 77 cents, on average.

Lafley returned in May, almost four years after stepping down, to help the world’s largest consumer-products maker regain customers in key categories such as detergents and beauty. He announced no major changes to the company’s strategy, and P&G forecast profit that was in line with analysts’ estimates.

“That could suggest that A.G. Lafley has confidence in what the direction of the company is,” Ali Dibadj, an analyst at Sanford C. Bernstein & Co. in New York, said in an interview. “On the other hand it might suggest that there just hasn’t been enough time figuring out where the problems are and that there are bigger problems.”

He rates the shares the equivalent of a buy.

Profit excluding some items in the current fiscal year will rise 5 percent to 7 percent, the company said today. That implies earnings of $4.25 a share to $4.33 a share. Analysts’ estimated $4.32, on average.

P&G rose 1.7 percent to $81.64 at the close in New York. The shares have gained 20 percent this year, matching the advance for the Standard & Poor’s 500 Index.

Sales Beat

P&G’s fourth-quarter sales rose 2.2 percent to $20.7 billion, topping analysts’ $20.5 billion estimate. Sales volumes increased 5 percent in the company’s health care segment and 6 percent in its home care business.

Foreign-currency fluctuations will lower sales growth this year by about 2 percent and earnings per share by 6 percentage points, P&G said.

About a year ago, activist investor Bill Ackman bought a $1.8 billion stake in the consumer-products company and then began agitating to replace CEO Bob McDonald.

McDonald started during the depths of the recession in July 2009, and some analysts and investors expressed dismay that P&G’s strategy was too timid during his tenure. By contrast, Lafley was known for big moves, such as his $57 billion acquisition of Gillette Co. in 2005.

In May, a month after P&G reported revenue at the bottom end of its forecast, the company announced that Lafley would return to replace McDonald.

Lafley Moves

Lafley’s first major move was to streamline P&G’s businesses into four industry-based groups to help speed product innovations and the company’s global expansion. He said today that he’ll focus on boosting innovation and productivity to win back customers, particularly in P&G’s home market.

“We have the tools and techniques to understand who our best consumer is, business by business, brand by brand, and to act on it,” he said during the company’s earnings call today. “So we’ve rededicated ourselves to really understanding the consumer, really winning with the consumer.”

Separately, Avon Products Inc., which competes with P&G in beauty products, reported second-quarter profit excluding some items of 29 cents a share, beating the 26-cent average estimate of analysts surveyed by Bloomberg. The New York-based company’s sales fell 1.9 percent to $2.51 billion, trailing analysts’ $2.58 billion estimate.

Avon’s sales fell the most in its home market, with North American revenue sliding 12 percent as the number of representatives shrank.

Clorox Results

Clorox Co., maker of its namesake bleach and Burt’s Bees skin care, also reported profit that topped analysts’ estimates. Earnings per share were $1.38, compared with an average estimate of $1.34. Sales of $1.55 billion trailed the projected $1.57 billion.

The company, based in Oakland, California, reaffirmed its forecast for adjusted earnings per share of $4.55 to $4.70 in its fiscal 2014. Analysts estimated $4.61.

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