Procter & Gamble Q1 Profit Beats View, But Sales Down 12%

(RTTNews) - Consumer goods giant Procter & Gamble Co. (PG) on Friday reported a better-than-expected profit for the first quarter, as lower expenses and higher margins offset a double-digit decline in sales due primarily to foreign exchange impacts.

The Cincinnati, Ohio-based maker of Tide detergent, Crest toothpaste and Gillette shaving razors noted that increased volatility in market growth and foreign exchange rates have made earnings results more difficult to forecast.

For fiscal 2016, P&G maintained its outlook for core earnings per share to be down slightly to up mid-single digits from restated $3.76 per share in fiscal 2015.

P&G also maintained its outlook for fiscal 2016 organic sales of in-line to up low single digits versus fiscal 2015. However, the company now expects all-in sales to be down high single digits, compared to its prior forecast for net sales decline in the low-to-mid single digit range.

On average, analysts polled by Thomson Reuters expect the company to report earnings of $3.77 per share for the year on revenues of $68.19 billion.

For the first quarter, net earnings attributable to P&G rose to $2.60 billion or $0.91 per share from $1.99 billion or $0.69 per share in the prior-year period.

Core earnings from continuing operations were $0.98 per share, compared to $0.99 per share last year. On a currency-neutral basis, core earnings per share were $1.11 per share. Analysts expected the company to earn $0.95 per share for the quarter.

Net sales declined 12 percent to $16.53 billion from $18.77 billion in the year-ago quarter. Analysts had a consensus revenue estimate of $17.17 billion.

The decline in sales include a negative nine percentage point impact from foreign exchange and two percentage point impact from the Venezuela deconsolidation and minor brand divestitures. Organic sales declined 1 percent.

Gross margin expanded 260 basis points to 50.7 percent, while operating margin rose 340 basis points to 22.8 percent.

P&G said it expects second-quarter organic sales growth to be positive and to further strengthen in the back half.

PG closed Thursday's trading at $74.85. In Friday's pre-market, the stock is up $2.35 or 3.14 percent to $77.20.