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Procter & Gamble (PG) Lowers FY13 EPS Outlook on Bolivar Revaluation

February 14, 2013 4:12 PM EST Send to a Friend
The Procter & Gamble Company (NYSE: PG) provided an update of its fiscal year 2013 earnings per share outlook following the Venezuelan government’s announced intention to devalue its currency (bolivar fuerte). The official exchange rate is now bolivares fuertes 6.30 per United States dollar, effective with the publication of the Official Gazette on February 13, 2013. It was also announced that the currency market administered by the central bank known as SITME will be eliminated. SITME transactions were previously valued at 5.30 bolivares fuertes per U.S. dollar.

P&G said it expects to incur one-time charges in the range of $200 million to $275 million after-tax, or $0.07 to $0.09 per share, based on its preliminary assessment of revaluing the local balance sheet at the new exchange rate. The final impact will be dependent on confirmation of final balance sheet positions at the date of the devaluation. The Company said it will recognize the one-time charges as non-core items in its presentation of fiscal year 2013 results.

In addition, the Company said there will be ongoing financial impacts related to the translation of local financial statements at the new exchange rate and inter-currency operational transactions, such as importation of finished products and raw materials. P&G estimates these impacts will reduce fiscal year 2013 core earnings by approximately $0.03 per share. P&G estimates the annualized impact on core earnings to be in the range of $0.06 to $0.07 per share. These estimates assume that the 6.30 exchange rate will apply to all future transactions and that the Company will have full access to currency at this rate necessary to operate its Venezuelan business. These estimates also assume current pricing regulations continue to be enforced.

Fiscal Year 2013 EPS Guidance

P&G adjusted its core earnings per share guidance for the year to a range of $3.94 to $4.04 from a prior range of $3.97 to $4.07 to reflect the $0.03 per share operating impact on core earnings.

The Street sees FY13 EPS of $4.07.

On an all-in GAAP basis, P&G reduced its earnings per share guidance to a range of $3.92 to $4.04 from its prior outlook of $4.04 to $4.14 per share, reflecting the $0.03 operating impact and the $0.07 to $0.09 of one-time charges from balance sheet revaluation.

January – March 2013 Quarter EPS Guidance

The Company adjusted its March quarter core EPS guidance to a range of $0.90 to $0.96 from a prior range of $0.91 to $0.97 to reflect a $0.01 per share operating impact on core earnings.

The Street sees EPS of $0.96.

On an all-in basis, P&G reduced its March quarter earnings per share outlook to a range of $0.80 to $0.88 from its prior guidance range of $0.90 to $0.96, reflecting a $0.01 per share operating impact and the $0.07 to $0.09 of one-time charges from balance sheet revaluation.




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