Procter & Gamble Profit Declines, To Exit Duracell Business

(RTTNews) - Consumer goods giant Procter & Gamble Co. (PG) reported Friday a profit for the first quarter that declined 34 percent from last year, hurt by goodwill impairment charges and a revenue decline.

Procter & Gamble booked a $932 million charge related to the sale of its interest in a China-battery joint venture back in August.

P&G says it will now exit its Duracell battery business, aiming to split off Duracell into a stand-alone company.

Core earnings per share matched analysts' expectations, while quarterly sales missed their estimates. The company reaffirmed core earnings and organic sales growth guidance for the full-year 2015.

"P&G's first quarter results were in-line with our expectations, despite a very difficult operating environment. This keeps us on-track to deliver our fiscal year commitments," Chairman, President and CEO A.G. Lafley said in a statement.

The Cincinnati, Ohio-based maker of Tide detergents, Crest toothpaste and Gillette shaving razors reported net earnings of $1.99 billion or $0.69 per share for the first quarter, lower than $3.03 billion or $1.04 per share in the prior-year quarter.

Income from continuing operations for the quarter declined to $2.00 billion or $0.68 per share from $3.04 billion or $1.03 per share in the year-ago quarter.

Results for the latest quarter include a charge of $0.32 per share to adjust the carrying values of goodwill and indefinite-lived intangible assets in its Duracell battery business.

The company said core earnings from continuing operations, which excludes certain items, was $1.07 per share, compared to last year's $1.05 per share. On a currency-neutral basis, core earnings per share increased 9 percent.

On average, 21 analysts polled by Thomson Reuters expected the company to report earnings of $1.07 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter edged down to $20.79 billion from last year's $20.83 billion, and missed nineteen Wall Street analysts' consensus estimate of $20.83 billion by a whisker.

Beauty care net sales decreased 1 percent to $4.86 billion, while health care net sales grew 6 percent to $2.01 billion from last year. Grooming net sales also edged down 1 percent to $1.94 billion from last year.

Fabric care and home care net sales declined 2 percent from a year ago to $6.54 billion, while baby feminine and family care net sales edged up 1 percent to $5.32 billion from a year ago.

Operating margin for the quarter contracted 570 basis points to 14.1 percent from last year, as selling, general and administrative expense, as a percentage of total sales, increased 90 basis points, while gross margin remained flat.

Looking ahead to fiscal 2015, the company continues to expect core earnings per share growth in the mid-single digits range, on projected organic sales growth in the low-to-mid single digit range, and net sales growth in the low single digit range, including a negative two point impact from foreign exchange.

Street is currently looking for full-year 2015 earnings of $4.40 per share, on annual sales growth of 0.5 percent to $83.52 billion.

"We continue to accelerate and increase productivity savings, sharpen our strategies and strengthen our portfolio by focusing on our biggest opportunities. The pet care divestiture and exit of the battery business will allow us to further focus these efforts," Lafley added.

The company said it completed the Pet Care business divestiture during the quarter.

PG closed Thursday's regular trading session at $83.23, down $1.03 on a volume of 14.29 million shares. In the past 52-week period, the stock has been trading in a range of $75.26 to $85.82.