Procter & Gamble 3Q net rises 6 pct on cost cuts

NEW YORK (AP) -- Procter & Gamble says its net income rose 6 percent in the fiscal third quarter, beating expectations as the company cut costs and gained market share in North America and elsewhere.

Still, the world's largest consumer product maker issued a weak fourth-quarter outlook. Its stock fell in premarket trading.

The Cincinnati-based company, which makes products ranging from Tide detergent to Crest toothpaste and Gillette razors found in 98 percent of American households, is cutting costs and ramping up innovation to offset a weakened European economy and slowing growth in China.

New products such as Tide Pods — detergent in a capsule — in North America, which the company is now rolling out in Mexico, helped P&G hold or increase market share in categories representing more than 50 percent of its sales globally and two-thirds of its sales in the U.S. Other new product introductions include Oil of Olay CC Cream and the Swiffer Sweeper with Gain scent.

But marketing new products is expensive. The company's fourth-quarter outlook fell below expectations.

Executives on a call with the media said that was partly due to the devaluation of the Venezuelan currency, but also because it must spend more to introduce the new products. P&G spends more on advertising than any other company, according to Kantar Media.

Citi Investment Research analyst Wendy Nicholson said analyst estimates for the fourth quarter were too high and advised investors to "focus on the fact that P&G is in fact actually delivering at the higher end of its guidance, which given where we have been in recent years with this stock, is a big improvement." She kept her "Buy" rating on the company.

P&G's net income for the January-to-March quarter rose to $2.57 billion, or 88 cents per share. That compares with net income of $2.41 billion, or 82 cents per share last year.

Excluding restructuring charges and related to the devaluation of the Venezuelan currency, earnings totaled 99 cents per share. Analysts expected 96 cents, according to FactSet.

"Strong cost savings enabled us to exceed our outlook on the bottom line," CEO Bob McDonald said in a statement.

P&G is aiming to save $10 billion by 2016. Last year, P&G admitted missteps in some emerging markets — which make up nearly 40 percent of its sales — when it expanded in certain product areas too quickly. But it then introduced a plan to focus on its 20 biggest new products and its 10 most-profitable emerging markets, which has led to improving market share.

Revenue rose 2 percent to $20.6 billion. That fell short of analyst expectations of $20.72 billion. Beauty segment volume, which includes products like Pantene shampoo and Oil of Olay, fell 1 percent, hurt by heavy competition in the category. Grooming segment volume, including Gillette and Venus razors, fell 2 percent as strength in blades and razors was offset by lower appliance sales.

Health care volume grew 5 percent as the company rolled out oral care products in emerging markets and a stronger cold and flu season compared with last year.

Fabric care and home care volume rose 3 percent, helped by Tide Pods growth. And baby care and family care volume rose 2 percent helped by new products and overall market growth.

The company expects fourth-quarter net income of 69 cents to 77 cents per share, excluding one-time items. Analysts expect 82 cents per share.

For the year, P&G raised the low end of its guidance by 2 cents and now expects net income of $3.96 to $4.04 per share. Analysts expect $4.37 per share.

Shares fell $2.22, or 2.7 percent, to $80.32 during midday trading. The stock is up 22 percent since the beginning of the year.