A display of Pampers diapers are seen on sale in Denver February 16, 2017. REUTERS/Rick Wilking
BENGALURU: Procter & Gamble Co (P&G), maker of Ariel detergent and Gillette razors, reported an 8.3% fall in third-quarter profit, hurt partly by a slowdown in consumer spending in the United States and a stronger dollar.
P&G’s adjusted earnings of 96 cents per share, however, beat Wall Street estimates by 2 cents even as quarterly net sales came in below expectations.
The company’s stock, which has jumped 10.6% in the past year, was down 0.9% in premarket trading. The S&P 500 index has risen 6.6% in the same period.
Consumer spending in the United States braked sharply in the first three months of the year, with retail sales falling in both February and March and consumer prices dropping for the first time in just over a year.
On the other hand, the US dollar rose about 3.6% in the March quarter, on an average, compared with a quarter earlier, spurred by investors betting on the so-called “Trump trade”.
A strong dollar makes US goods less competitive abroad, and foreign earnings less valuable when converted into dollars.
P&G, whose brands are sold in more than 180 countries, has been selling off unprofitable brands and focusing on core brands such as Tide and Pampers to revive sluggish sales.
It sold 41 of its brands, including Clairol and Wella, to Coty Inc in a US$12.5bil deal in October.
The company’s quarterly sales have fallen for more than three years due to the company cutting its brand portfolio.
Sales fall again
P&G, which traces its roots to a family-run candle and soap business in 1837, maintained expectations of a mid-single digit rise in full-year adjusted earnings per share growth, and a 2%-3% increase in organic sales growth.
Organic sales in P&G’s two largest businesses - fabric and home care, and baby, feminine and family care - rose 1% during the quarter. Organic sales at its grooming business fell 6%.
The consumer goods giant, whose iconic brands include Tide, Pampers, Head-and-Shoulders and Vicks, said net sales fell about 1% to US$15.61bil - the 13th straight quarter of declines. Analysts had been looking for US$15.73bil, according to Thomson Reuters I/B/E/S.
Net income attributable to the Cincinnati, Ohio-based company declined to US$2.52bil, or 93 cents per share, in the three months ended March 31, from US$2.75bil, or 97 cents per share, a year earlier. - Reuters
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