This does not bode well when consumables miss by this much.
P&G Cuts Forecast as Quarterly Sales Trail Estimates (Update2)
By Carol Wolf
Jan. 30 (Bloomberg) -- Procter & Gamble Co., the world’s largest consumer-products company, reported second-quarter revenue that fell more than analysts estimated and lowered its annual forecast as shoppers curbed purchases and the stronger dollar hurt overseas sales.
P&G is “comfortable” with an analyst consensus for earnings of $4.29 a share in 2009, the midpoint of its revised range, the Cincinnati-based company said today in a statement. Declining home prices, rising unemployment and tight credit caused consumer confidence to drop to the lowest on record in December.
“The environment will remain difficult and highly volatile, at least in the near term,”
Chief Executive Officer Alan Lafley said in the statement.
Revenue fell 3.2 percent to $20.4 billion, trailing the $20.7 billion average of analysts’ estimates compiled by Bloomberg. For the full year, the company forecast sales will fall as much as 4 percent,
affected by foreign-exchange rates. A stronger dollar decreases the value of sales and profits when they’re translated from foreign currencies.
Procter & Gamble dropped $1.93, or 3.3 percent, to $56.29 at 9:35 a.m. in New York Stock Exchange composite trading. The stock tumbled 16 percent last year.
Excluding the effect of divestitures, acquisitions and currency fluctuations, sales rose 2 percent in the second quarter because of price increases the company instituted last year to cover higher raw material costs. Volume decreased 3 percent as retailers and consumers bought fewer items.
“They are doing the best they can in a difficult environment,” Ali Dibadj, an analyst with Sanford C. Bernstein & Co. in New York, said today in a telephone interview. “But there are definitely some chinks in the armor showing up.”
Profit from continuing operations fell to $2.96 billion, or 94 cents a share, in the three months that ended Dec. 31, from $3.2 billion, or 96 cents, a year earlier.
Including a gain from the sale of its Folgers coffee unit, net income rose 53 percent to $5 billion, or $1.58 a share.
Procter & Gamble said 2009 earnings will be $4.20 to $4.35 a share. Its previous range was $4.28 to $4.38, including a gain from the sale of the Folgers unit and some one-time costs.
Third-quarter profit will be 78 cents to 86 cents a share including Folgers-related charges, compared with 82 cents a year earlier and an average analyst estimate of 86 cents.
Sales will decline as much as 7 percent in the quarter,
to about $19.1 billion, on lower volume. The average estimate of 13 analysts is $19.5 billion.
P&G sold its Folgers coffee business to Orrville, Ohio- based J.M. Smucker Co. last year for $3 billion. The acquisition was completed in November.