Procter & Gamble Profit Tops View On Cost Cutting, But Sales Miss

(RTTNews) - Consumer goods giant Procter & Gamble Co. (PG) reported Friday a profit for the fourth quarter that grew 38 percent from last year, reflecting improved operating margins amid lower expenses.

Core earnings per share topped analysts' expectations by four cents, but quarterly sales missed their estimates. The company also provides guidance for core earnings and organic sales growth guidance for the full-year 2015.

The Cincinnati, Ohio-based maker of Tide detergents, Crest toothpaste and Gillette shaving razors reported net earnings of $2.58 billion, or $0.89 per share for the fourth quarter, higher than $1.88 billion, or $0.64 per share in the prior-year quarter.

The company said core earnings from continuing operations, which excludes certain items, was $0.95 per share, compared to last year's $0.79 per share. On a currency-neutral basis, core earnings per share increased 25 percent.

On average, 23 analysts polled by Thomson Reuters expected the company to report earnings of $0.91 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter edged down 1 percent to $20.16 billion from last year's $20.30 billion, and missed twenty Wall Street analysts' consensus estimate of $20.48 billion.

Net sales included a two percentage points negative impact from foreign exchange and a modest negative impact from minor divestitures. Organic sales grew 2 percent, including a two percentage point benefit from pricing and volume remained flat with last year.

Beauty care net sales decreased 5 percent to $4.63 billion, and health care net sales dropped 1 percent to $1.81 billion, while grooming net sales grew 5 percent to $2.07 billion from last year.

Fabric care and home care net sales declined 2 percent from a year ago to $6.26 billion, while baby care and family care net sales edged up 1 percent to $5.20 billion from a year ago.

Operating margin for the quarter improved 300 basis points to 16.1 percent from last year, as selling, general and administrative expense, as a percentage of total sales, declined 210 basis points, partially offset by a 70 basis points drop in gross profit margins.

"P&G delivered top and bottom line commitments for the fiscal year. We met our objectives in a very difficult operating environment, delivered strong constant currency earnings growth, and built on our strong track record of cash returns to shareholders," Chairman, President and CEO A.G. Lafley said in a statement.

Looking ahead to fiscal 2015, the company said it expects 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 one point impact from foreign exchange.

Street is currently looking for full-year 2015 earnings of $4.51 per share, on annual sales growth of 2.6 percent to $86.03 billion.

Separately, it was announced today that P&G has completed the sale of its pet food brands Iams, Eukanuba and Natura in North America to privately-held Mars, Inc. The $2.9 billion deal was agreed upon in early April.

Mars also said it will exercise the option to buy P&G's pet food businesses in Asia and elsewhere. That transaction is expected close in about a year.

PG closed Thursday's regular trading session at $77.32, down $0.44 on a volume of 11.24 million shares. In the past 52-week period, the stock has been trading in a range of $73.61 to $85.82.