Procter & Gamble profits fall
Thursday , August 01, 2013 - 10:54 AM
NEW YORK -- Procter & Gamble Co. will focus on its largest and most profitable brands and markets and put a laser focus on cutting costs to become more productive, newly installed CEO A.G. Lafley said Thursday.
Lafley, who was CEO from 2000 to 2009 and returned to the company in May, made the remarks as the world's largest consumer product company said its fiscal fourth-quarter net income dropped 48 percent due to a write-down related to its Braun Appliance business and other one-time costs.
But its adjusted results beat Wall Street expectations, and its shares edged up in premarket trading.
P&G has been working on a turnaround effort aimed at focusing on its top 40 top businesses, 20 biggest new products and 10 most profitable emerging markets as it undergoes a cost cutting plan aimed at saving $10 billion by fiscal 2016.
The Cincinnati-based company replaced CEO Bob McDonald in May with Lafley in an effort to step up the turnaround efforts.
In a media briefing, Lafley said he had spent the last two months doing a "deep dive" to understand consumers and its markets.
"We're not consistently winning now, but we're committed to making changes to significantly improve performance," he said. While declining to give specifics, Lafley said the company would focus on its most profitable brands, countries, channels and customers.
CFO Jon Moeller said the plan was more of a "refinement" in strategy rather than a major change.
"We will continue to make choiceful investments in core brands, our biggest innovation opportunities, and in our core developed and most promising developing markets," Lafley said in a statement accompanying the results. He added the company will have an "overriding focus on value creation."
P&G, whose brands include Tide detergent and Crest toothpaste said after paying preferred dividends net income totaled $1.88 billion, or 64 cents per share, for the three months ended June 30. That's down from $3.63 billion, or $1.24 per share in the prior year quarter.
Excluding one-time items, adjusted earnings totaled 79 cents per share. That beat analyst expectations of 77 cents per share, according to FactSet.
One-time items included restructuring charges, legal fees in Europe and a 10 cents per share impairment charge related to its Braun Appliances business. That was due to the weakening of the Japanese yen, since a large part of Braun Appliances earnings are generated in Japan, the company said.The stronger dollar hurt results by 6 cents per share.
Revenue rose 2 percent to $20.66 billion, helped by volume growth and higher selling prices. Analysts expected revenue of $20.54 billion.
Volume rose 5 percent in total, with a 6 percent rise in fabric and home care and a 4 percent rise in beauty volume. Grooming, which includes razors and shaving cream, was flat.
For the year, net income after paying preferred dividends rose 5 percent to $11.31 billion, or $3.86 per share. That compares with net income of $10.76 billion, or $3.66 per share in the prior year.
Revenue rose 1 percent to $84.17 billion from $83.68 billion a year ago.
Executives said P&G is going to stop giving quarterly guidance, but will continue to give fiscal year guidance and update it quarterly. In fiscal 2014, the company expects earnings excluding one-time items to rise 5 percent to 7 percent, implying results of $4.25 to $4.33 per share.
It expects revenue to rise 1 percent to 2 percent, implying revenue of $85 billion to $85.85 billion.
Analysts expect earnings of $4.32 per share on slightly higher revenue of $86.47 billion.
P&G shares rose $1.40, or 1.7 percent, to $81.70 in premarket trading an hour before the market opening.