Correction: Earns-Procter & Gamble story

Correction: Earns-Procter & Gamble story

Associated Press

NEW YORK (AP) -- In a story Jan. 25 about Procter & Gamble's second-quarter net income, The Associated Press misspelled the name of a Morningstar analyst. It is Erin Lash, not Dash.

A corrected version of the story is below:

Procter & Gamble fiscal 2Q profit jumps

Procter & Gamble posts big jump in fiscal 2Q profit, boosts 2013 earnings guidance

By MAE ANDERSON

The Associated Press

NEW YORK (AP) -- Procter & Gamble is turning a corner.

The world's largest consumer goods company, whose products like Tide detergent and Gillette razors are in 98 percent of U.S. households, in recent years has lost business to competitors as it grew too fast overseas and kept prices high.

But on Friday P&G reported that its fiscal second quarter profit more than doubled as the plan the company launched last year to lower costs and roll out new products boosted its bottom line. It is the second quarter in a row that P&G beat Wall Street estimates.

"We have more work to do, but the underlying trends are improving," said CFO Jon Moeller in a call with analysts.

The results signal a change for P&G, which like many U.S.-based companies, has been focusing on growing its business in places such as China and India as growth in more developed regions like North America have slowed. But while competitors lowered prices, P&G took for granted that many of its products are household names in some regions, and the company held its ground on pricing. As a result, P&G lost market share in more than half of the categories in which it sells products.

Investors, most notably activist William Ackman, who took a 1 percent stake in P&G in July, have been vocal about the company's need to streamline operations and grow market share globally.

P&G in February launched a plan to focus on the company's 40 top businesses, 20 biggest new products and 10 most profitable emerging markets. It also rolled out cost-cutting measures aimed at saving $10 billion by fiscal 2016. Later in the year, P&G lowered prices for laundry detergent, toothpaste and other products in the U.S., and cut jobs.

P&G's quarterly results show that the strategy is finally working. The company, which is based in Cincinnati, held or grew market share in businesses representing almost 50 percent of sales during the fiscal second quarter that ended on Dec. 31.

Another good sign: The positive results come from both developed markets as well as emerging markets. For instance, in China, a key emerging market that has been facing slowing growth, P&G held or grew market share in about half of the categories it competes in, while market share improved for two-thirds of its portfolio there.

"We're really seeing growth both in developed markets and developing markets," said CEO Bob McDonald said in a conference call.

The growth was driven in part by recent product launches that include 3D White toothpaste in Brazil and the introduction of a low-priced razor Gillette Guard in Egypt. In the U.S., Tide Pods drove the improvement in the detergent category and Cascade dish detergent, Gillette Fusion razors and Crest toothpaste were other strong sellers.

Lower prices in North America helped spur market share gains for products such as Gain detergent, dishwashing liquid such as Cascade and Gillette razors, which gained 2 points of market share to boast 74 percent in the U.S. male blades and razors category.

P&G's cost-cutting measures also boosted results. The company said a plan to cut 10 percent of its non-manufacturing workforce, or 5,700 jobs, by the end of the fiscal year is 95 percent complete — about four or five months ahead of schedule. The company also plans to cut 2 to 4 percent more jobs per year in fiscal 2014 to 2016.

"We remain confident that our focus areas ... are the right ones, and should generate over time the kind of earnings progress that will put us among the best in our industry," Moeller, P&G's CFO, said in the conference call.

During the fiscal second quarter, P&G earned $4.06 billion, or $1.39 per share, up from $1.69 billion, or 57 cents per share, in the same quarter last year. Excluding special items, it earned $1.22 per share. Revenue increased 2 percent to $22.18 billion. Analysts polled by FactSet expected earnings of $1.11 per share on $21.86 billion in revenue.

Based on the better-than-expected results for the first half of the year, P&G said it expects fiscal 2013 core earnings of $3.97 to $4.07 per share on revenue growth of 1 percent to 2 percent. It previously predicted an adjusted profit of $3.80 to $4 on flat revenue growth to up to 1 percent. Analysts expect earnings of $3.97 per share.

On the news, P&G shares closed up $2.78, or nearly 4 percent, to $73.19, after reaching a 52-week high of $73.24.

Analysts had mixed reactions to the upbeat report. Wendy Nicholson, an analyst at Citi Investment Research, wrote in a note that P&G's strategy seems to be working.

"We are optimistic that this trend of improvement will continue, especially given that many of P&G's new product launches have just recently, or have yet to, hit the market," Nicholson wrote in the note.

Erin Lash, an analyst for Morningstar, was more cautious. She said that the cost-cutting moves P&G has put in place have boosted results, but the effect might be temporary.

"P&G is benefiting from their stepped up cost saving efforts," she said. "We can't deny those are gaining traction, but we question the sustainability of their efforts.

P&G's results come after its competitor Unilever on Wednesday reported that its full-year net income rose 5 percent, helped by higher prices and cutting costs.

The Dutch company, which makes consumer products such as Dove soaps and Magnum ice cream, recently has been outperforming its larger rival.

Rates

View Comments (0)

Recommended for You

  • Tycoon buys 30 Rolls-Royces for Macau hotel

    A Hong Kong tycoon has placed the biggest ever order for Rolls-Royce cars, agreeing to buy 30 Phantoms to chauffeur guests at a luxury resort he's building in the global gambling capital of Macau. Stephen Hung's $20 million purchase surpasses the 14 Phantoms bought by Hong Kong's Peninsula Hotel in…

    Associated Press
  • 1 Tip To Lose Belly Fat

    It's Hollywood's Hottest Diet And Gets Rid Of Stubborn Fat Areas Like Nothing Else.

    AdChoicesagoodcooksSponsored
  • Before You Buy Alibaba, Check Out 4 Top China Stocks

    Before You Buy Alibaba, Check Out 4 Top China Stocks While investors gear up for Alibaba Group 's (BABA) hotly anticipated initial public offering, don't forget about other Chinese stocks that are worth keeping an eye on. Today's Young Guns Screen of

    Investor's Business Daily
  • Tycoon's arrest sends shock wave through Russia

    Tycoon's arrest sends shock wave through Russia MOSCOW (AP) — The arrest of a Russian telecoms and oil tycoon has sent shock waves through the country's business community, with some fearing a return to the dark days of a decade ago, when the Kremlin asserted its power by imprisoning the country's…

    Associated Press
  • "The Retiree Next Door": How successful retirees stretch their savings

    "The Retiree Next Door": How successful retirees stretch their savingsBy the time she hit her late 40s, Toni Eugenia wasn’t sure she would ever be able to retire. Eugenia, 56, a pharmacy technician who lived in Houston, was nearly $200,000 in debt and

    Yahoo Finance
  • Play

    Citi, Bank of America Offer Discounted Mortgages

    Citigroup and Bank of America will offer mortgages at discounted interest rates to help borrowers with low incomes or subprime credit. AnnaMaria Andriotis joins MoneyBeat. Photo: Getty.

    WSJ Live
  • Costco Stores in Canada to Stop Taking American Express

    “The credit card relationship between American Express and Costco Wholesale Canada will not be renewed when it expires” on Dec. 31, the company said today in an e-mail to Canadian customers. The message was attributed to Lorelle Gilpin, vice president of marketing and membership for Costco…

    Bloomberg
  • CNBC Anchor Calls Out Fed-Hater Bill Fleckenstein In Startling Shouting Match

    CNBC Bill Fleckenstein of Fleckenstein Capital appeared on CNBC's Futures Now program on Tuesday. Futures Now host Jackie DeAngelis came out swinging, asking Fleckenstein right at the top if he was willing to admit that he had misunderstood monetary policy. Sounding taken aback, Fleckenstein…

    Business Insider
  • Wondering How You Could Save on Home Insurance?

    Get a quote from Farmers Insurance and discover how you could save. Speak with an agent to get the knowledge you need to make an informed decision.

    AdChoicesFarmers InsuranceSponsored
  • Beanie Babies creator's sentence debated in court

    Beanie Babies creator's sentence debated in court CHICAGO (AP) — Federal prosecutors seeking to put the billionaire creator of Beanie Babies in prison for hiding millions in Swiss bank accounts told appellate court judges Wednesday that the toymaker's sentence of probation threatens to erode the…

    Associated Press
  • Venture Capitalist Makes Case Against 'Shark Tank'

    If you watch the TV show "Shark Tank" as entertainment and not to obtain a startup education, you will be benignly inspired by fellow entrepreneurs. "Shark Tank" is a reality competition show that features entrepreneurs pitching business ideas to a panel of potential investors, referred to as…

    The Wall Street Journal
  • Apple to unveil new iPads, operating system on Oct. 21 : report

    The company plans to unveil the sixth generation of its iPad and the third edition of the iPad mini, as well as its operating system OS X Yosemite, which has undergone a complete visual overhaul, the Internet news website said. Trudy Muller, a spokeswoman for Apple, declined to comment. The iPad is…

    Reuters
  • Gilead Stock Is Falling On These Drug Setbacks

    Gilead Stock Is Falling On These Drug Setbacks Gilead Sciences (GILD) shares are backsliding Wednesday on news that the patient drop-out rate for hepatitis C drug Sovaldi is quadruple that of clinical trials. In addition, the biotech's Phase 2 study results

    Investor's Business Daily
  • Margaritaville casino owners seek bankruptcy

    The owner of Biloxi's Margaritaville casino has filed for Chapter 11 bankruptcy protection Tuesday, only hours before a hearing where the landlord aimed to seize the property. The filing by MVB Holding LLC in U.S. Don Dornan, a lawyer for landlord Clay Point LLC, said the company had planned to ask…

    Associated Press
  • Play

    Hilsenrath: Fed Still Sees 2015 for Rate Increase

    WSJ's Jon Hilsenrath discusses the Federal Reserve's decision to hold steady on interest rates, but the central bank foresees a rate increase by early 2015. Photo: Getty.

    WSJ Live
  • Tired of Living Paycheck to Paycheck?

    New website reveals how to save $1,000's when you're living paycheck to paycheck. See exactly how.

    AdChoices Media ForceSponsored
  • Don't care about Alibaba? Here's why it may matter

    When the Alibaba Group Holding prices its initial public offering Thursday, small businesses in particular will be watching. Founder Jack Ma -the former English-teacher-turned-dot-com billionaire-has touted his e-commerce platform as a way for smaller merchants to expand their international…

    CNBC
  • Here's What Mark Cuban Wishes He Knew About Money In His 20s

    Cuban is the owner of the Dallas Mavericks basketball team. Billionaire investor and entrepreneur Mark Cuban is generous with his advice. When we asked him what he wishes he'd known about money in his 20s, he said:

    Business Insider
  • Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More

    Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More Stocks were firm on Wednesday morning ahead of the FOMC meeting outcome. Tuesday’s rally may have sparked higher interest again, and investors are looking for bargains

    24/7 Wall St.
  • SHOE COMPANY: Our CEO Just Disappeared And Most Of The Money Is Gone

    "and like that: he's gone." This is an actual headline from a company press release: "CEO and COO disappeared, most of the company's cash missing." (Via FastFT) In a statement, German-based shoe company Ultrasonic said its CFO,  Chi Kwong Clifford Chan, has been unable to reach the company's CEO,…

    Business Insider
  • Boeing may have outfoxed Musk, but it could have bigger problems

    Elon Musk is arguably one of the greatest entrepreneurial minds of the 21st Century, but he was outsized an old school aerospace giant. Boeing won the bulk of NASA’s contract for a space taxi.  One of the other companies vying for the deal is SpaceX, the company headed by Tesla’s Musk, will get a…

    Talking Numbers
  • Billionaire Investor Says Chinese People Work Harder And Western Companies Could Face Deep Trouble After Alibaba IPO

    Michael Moritz, the chairman of VC firm Sequoia Capital, is a huge fan of Chinese internet companies and reiterated his enthusiasm for the Chinese market in an interview with The Wall Street Journal Wednesday. The billionaire investor described the Alibaba IPO as a “major landmark event” that is as…

    Business Insider
  • AARP® Auto Insurance Program from The Hartford

    50+? Request a free quote and you could save $404* on Auto Insurance from The Hartford!

    AdChoicesThe HartfordSponsored
  • Don't buy Alibaba stock: 'Dean of Valuation'

    Investors should steer clear of Alibaba , valuation expert Aswath Damodaran said Wednesday. On CNBC's " Fast Money ," Damodaran, a professor of finance at New York University's Stern School of Business, noted that he was looking at Alibaba stock from the perspective of a long-term investor, not a…

    CNBC