Advertisement

Procter & Gamble Profit Rises 9.4% With Price Hikes

Share via
From Reuters

Consumer products giant Procter & Gamble Co. said Tuesday that its fiscal third-quarter earnings before restructuring-related items rose 9.4% as price increases for Tide laundry detergent and Pampers diapers helped offset a decline in shipments.

Price increases in Always feminine-care products in Western Europe and Pantene shampoo in the United States also boosted earnings, which, excluding the items, rose to $1.01 billion, or 71 cents a share, in line with analysts’ expectations.

A year ago, the Cincinnati-based company reported earnings of $923 million, or 64 cents a share, P&G; said.

Advertisement

The company said it had much to do to bolster earnings but it would meet previous estimates for fourth-quarter earnings, which helped boost shares almost $4.13 to close at $64.18 on the New York Stock Exchange.

Despite Tuesday’s gain, shares of P&G;, one of the 30 stocks in the Dow Jones industrial average, have still under-performed the blue chip index by more than 24% this year.

“We clearly have a lot more work to do to deliver the results I know this company is capable of,” said Alan Lafley, president and chief executive.

Advertisement

Lafley also said the company is still reviewing its business plans for fiscal 2002 and will offer guidance for next year later in the quarter.

Analysts were pleased that P&G;, which has been hit in the past by concerns about profit warnings, did not trim its outlook again.

“To be clear, P&G; is not out of the woods,” said Salomon Smith Barney analyst Wendy Nicholson, rating the results “generally unimpressive” in a research report. Still, she upgraded the stock because of valuation, easier quarterly comparisons in the future and “early signs that P&G; is getting more focused.”

Advertisement

Analysts had expected core earnings of 68 cents to 71 cents a share for the quarter ended March 31, with an average of 69 cents, according to research firm First Call/Thomson Financial.

Expectations were lowered after the company said in February that the financial crisis in Turkey, its 12th-largest market, would hurt results. The Turkish lira cut 3 cents from third-quarter earnings, P&G; said Tuesday.

Net income, including a $113-million after-tax restructuring charge, was $893 million, or 63 cents a share, compared with $753 million, or 52 cents a share, a year earlier.

Third-quarter sales fell 3% to $9.51 billion but would have been flat without negative impact from weak foreign currency.

Unit volume, or shipments, fell 3%. The company said product launches in the year-ago quarter helped boost volume then.

At a Glance

Other earnings, excluding one-time gains and charges unless noted:

* Tricon Global Restaurants Inc., the owner of Pizza Hut, KFC and Taco Bell restaurants, said first-quarter profit fell 27%, hurt by slowing sales at the company’s Taco Bell chain. Net income fell to $88 million, or 59 cents a share, from $120 million, or 80 cents, a year earlier, the company said. Revenue, which includes company sales and franchise fees, fell 5.7% to $1.51 billion. Taco Bell same-store sales fell 6% in the quarter, hurt partly by concern about a recall of taco shells that contained StarLink, a genetically engineered corn not approved for human consumption. Customers shunned restaurants even though the recall affected only the Taco Bell-brand shells sold in supermarkets. KFC same-store sales rose 2%, and same-store sales at Pizza Hut rose 3%.

Advertisement

* True North Communications Inc., the advertising agency that created the “Got Milk?” campaign, said first-quarter net income rose 30%. True North said a gain of $900,000, or 2 cents a share, from the sale of certain operations increased the firm’s net income to $9.1 million, or 21 cents a share, compared with $6.99 million, or 14 cents, a year earlier. Profit, excluding the gain, rose to $10 million, or 19 cents. Sales rose 7.5% to $356 million.

Advertisement