Procter & Gamble Q2 Profit Declines 31%, Results Miss Estimates

(RTTNews) - Consumer goods giant Procter & Gamble Co. (PG) reported Tuesday a profit for the second quarter that declined 31 percent from last year, hurt by foreign exchange impact, charges and a sales decline.

Core earnings per share and quarterly sales missed analysts' expectations. The company also reaffirmed currency-neutral core earnings per share and organic sales growth guidance for the full-year 2015.

"The October - December 2014 quarter was a challenging one with unprecedented currency devaluations. Virtually every currency in the world devalued versus the U.S. dollar, with the Russian Ruble leading the way," Chairman, President and CEO A.G. Lafley said.

The Cincinnati, Ohio-based maker of Tide detergents, Crest toothpaste and Gillette shaving razors reported net earnings of $2.37 billion or $0.82 per share for the second quarter, lower than $3.43 billion or $1.18 per share in the prior-year quarter.

Income from continuing operations for the quarter declined to $2.98 billion or $1.02 per share from $3.30 billion or $1.12 per share in the year-ago quarter.

The company said core earnings from continuing operations, which excludes certain items, was $1.06 per share, compared to last year's $1.15 per share. On a currency-neutral basis, core earnings per share increased 6 percent. Foreign exchange reduced core earnings by about $0.16 per share.

On average, 22 analysts polled by Thomson Reuters expected the company to report earnings of $1.13 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter declined 4 percent to $20.16 billion from last year's $21.10 billion, and missed nineteen Wall Street analysts' consensus of $20.62 billion, by a whisker. Organic sales growth was 2 percent. Sales included a negative five percentage point impact from foreign exchange.

Beauty, hair and personal care net sales decreased 6 percent to $4.96 billion, and health care net sales declined 3 percent to $2.09 billion from last year. Grooming net sales also dipped 5 percent to $2.01 billion from last year.

Fabric care and home care net sales declined 4 percent from a year ago to $5.78 billion, and baby feminine and family care net sales decreased 2 percent to $5.22 billion from a year ago.

Operating margin for the quarter contracted 80 basis points to 19.6 percent from last year, as gross margin decreased 40 basis points, partially offset by a 40 basis points improvement in selling, general and administrative expense, as a percentage of total sales.

Looking ahead to fiscal 2015, the company continues to expect organic sales growth in the low-to-mid single digit range, and currency-neutral core earnings per share growth in the double-digits.

Meanwhile, core earnings per share is now expected to be in the range of in-line to down low-single digits, on projected net sales decline of 3 to 4 percent, including a negative five point impact from foreign exchange.

Street is currently looking for full-year 2015 earnings of $4.15 per share, on annual sales decline of 4.7 percent to $79.13 billion.

"The outlook for the year will remain challenging. Foreign exchange will reduce fiscal 2015 sales by 5% and net earnings by 12%, or at least $1.4 billion after tax. We have and will continue to offset as much of this currency impact as we can through productivity driven cost savings. And we will continue to invest in our businesses, brands and product innovation, because it is the right thing to do for the mid- and long-term, while we deliver another year of strong cash returns to shareowners," Lafley added.

PG closed Monday's regular trading session at $89.58, down $0.37 on a volume of 9.36 million shares. In the past 52-week period, the stock has been trading in a range of $75.26 to $93.89.