P&G Earnings Top Expectations, but Volumes Fall

Procter & Gamble Co. on Tuesday reported better-than-expected earnings for its March quarter as a core sales metric improved, though volumes declined across nearly all of its businesses.

In the fiscal second quarter ended March 31, P&G said organic sales, a closely watched metric that strips out currency moves, acquisitions and divestments, rose 1%. Overall pricing improved 1%, but volume slipped 2%.

P&G logged a 5% volume decline in its beauty segment, a 6% drop in its grooming segment, a 3% decline in its health care segment, and a 2% slip in its baby, feminine and family care segment. The company said attributed its volume declines to lower shipments in developing markets, some brand divestitures and the so-called deconsolidation of its Venezuela operations—a move in which the company essentially wrote off its investment in the country even though it continues to do business there.

The Cincinnati maker of Pantene shampoo and Bounty paper towels has struggled for years to accelerate sales growth and is underperforming smaller, nimbler rivals that are growing sales organically in the U.S. and abroad.

Overall, P&G reported a profit of $2.75 billion, or 97 cents a share, up from $2.15 billion, or 75 cents a share, a year earlier. Excluding special items, per-share earnings fell to 86 cents a share. Revenue fell 6.9% to $15.76 billion.

Analysts polled by Thomson Reuters had forecast 82 cents a share in adjusted earnings on $15.81 billion in revenue.

The company said its gross margin increased 250 basis points in the quarter.

P&G also tightened its outlook for core earnings for the year to a range of down 3% to 6% from last year's core earnings of $3.76. The company had previously guided for earnings of about $3.91 a share. P&G said earnings are expected to be "significantly lower" than the prior year due to increased advertising investments, a higher tax rate, foreign-exchange headwinds and lower nonoperating income.

Shares in the company edged up down 0.4% premarket to $81.10.

Write to Anne Steele at [e-mail]

(END) Dow Jones Newswires

April 26, 2016 08:05 ET (12:05 GMT)

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