P&G profit misses St target, cuts outlook

Written by Reuters | Chicago | Updated: Feb 1 2009, 05:07am hrs
Procter & Gamble Co posted a profit that missed Wall Street estimates on Friday and cut its full year earnings forecast due to weaker demand, pushing shares down more than 3 %.

We expect the environment will remain difficult and highly volatileat least in the near term, Chairman and chief executive AG Lafley said in a statement.

In an effort to curb spending, consumers are using up what they have in their pantries rather than stocking up on items such as shampoo and detergent. Retailers are buying less in line with decreased demand and, at the same time, a stronger dollar lessens the value of sales outside the United States.

The world's largest consumer products maker posted a 53 % jump in quarterly profit driven by a gain from the sale of its Folgers coffee business.

P&G earned $5 billion, or $1.58 per share, in its fiscal second quarter, compared with a profit of $3.27 billion, or 98 cents per share, a year earlier.

P&G had forecast earnings of $1.58 to $1.63 per share. The results include a gain of 63 cents per share from the sale of Folgers to JM Smucker Co (SJMN).

Earnings from continuing operations totaled 94 cents per share, compared with average analyst forecast of 99 cents per share, according to Reuters Estimates.

Sales fell 3% to $20.37 billion, while volume dropped 3%. Organic sales, which exclude the impact of acquisitions, divestitures and foreign exchange, rose 2%.

In December, P&G said second-quarter organic sales growth would fall short of its forecast range of 4 % to 6%.

On a net basis, sales fell in every unit except for baby and family care, where sales rose 3 %.P&G expects fiscal 2009 sales to be flat to down 4 %. It forecast organic sales growth of 2 to 5 %, while organic volume should be flat to down 2 %.

The company still expects foreign exchange to reduce sales by about 5 %. P&G said it is comfortable with analysts' current consensus estimate of $4.29 per share for the year, which ends in June.