Procter & Gamble (PG) Trims Q4 Outlook; Cites Slower Growth in Key Markets, FX Headwinds

June 20, 2012 6:26 AM EDT Send to a Friend
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The Procter & Gamble Company (NYSE: PG) provided an overview of its strategic focus areas and preliminary financial guidance for the upcoming fiscal year 2013 at the Deutsche Bank Global Consumer Conference in Paris, France. Bob McDonald, P&G’s chairman of the board, president and chief executive officer said, “We are making the necessary adjustments to our growth strategy to increase focus on our core business and to achieve more balanced growth across geographies, product categories and the top and bottom lines.”

McDonald added that: “The entire P&G organization – and specifically its leadership – is committed to winning. Winning requires we deliver on our Total Shareholder Return (TSR) objectives. With more focus and better balance, we are confident we can deliver the level and quality of results that will enable P&G to win with our consumers, our customers and our shareholders.”

To achieve its objectives, P&G said it is prioritizing investments in its biggest, most profitable markets, on its biggest innovations and in its biggest emerging countries. In addition, the Company clarified that it intends to maintain strong investment levels in markets it has recently entered.

P&G said it expects to deliver improved results by continuing to be the industry leader in innovation, by driving productivity improvements and cost savings at an accelerated pace, and by improving the consistency of execution in all facets of its operations. P&G reiterated its objective to deliver $10 billion in cost savings by the end of fiscal year 2016, a program that includes a reduction of approximately 5,700 non-manufacturing roles by the end of fiscal year 2013.

In addition to its discussion of adjustments to its strategic focus areas, P&G provided an update to its financial guidance for the April – June 2012 quarter and preliminary guidance for fiscal year 2013.

April – June 2012 Quarter Guidance

For the April – June quarter, organic sales growth is now expected to be in the range of two to three percent, compared to a prior range of four to five percent. Foreign exchange is now expected to reduce net sales by four percent. Net sales are expected to be in the range of down two to down one percent compared to a prior range of an increase of one to two percent. Core earnings per share are now expected to be in the range of $0.75 to $0.79 per share, compared to a prior range of $0.79 to $0.85. All-in diluted net earnings per share, which includes a gain of $0.47 to $0.50 on the sale of the Snacks business, are expected to be in the range of $1.17 to $1.26 per share, compared to a prior range of $1.21 to $1.32. Versus prior guidance, the revisions to the Company’s fourth quarter outlook are primarily driven by slower than anticipated top-line growth from slower than expected market growth rates and market share softness in developed regions and negative impacts from foreign exchange rate changes.

The Street is looking for EPS of $0.82.

Preliminary Fiscal Year 2013 Guidance

Organic sales are expected to increase in the range of two to four percent. Core earnings per share are expected to be in-line to up mid-single digits percentage versus fiscal 2012 results. P&G noted that foreign exchange, based on early-June spot rates, will negatively impact fiscal 2013 EPS growth by approximately four percentage points. Excluding foreign exchange impacts, P&G’s core earnings per share outlook equates to approximately mid-to-high single digit growth.

The Company noted that it has just recently completed its planning process for fiscal year 2013 and cautioned that the high degree of volatility in areas such as foreign exchange, commodity costs and government policies could cause these preliminary estimates to change materially throughout the coming fiscal year. P&G said it will provide an update to its fiscal year 2013 financial outlook when it releases final results for fiscal year 2012 on August 3, 2012.




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