Procter & Gamble (PG) Misses Q2 EPS by 12c; Sees FY15 Core Earnings In-Line to Down Versus Prior Year

Procter & Gamble (NYSE: PG) reported Q2 EPS of $1.06, $0.12 worse than the analyst estimate of $1.18. Revenue for the quarter came in at $20.2 million versus the consensus estimate of $21.37 million.

"The October - December 2014 quarter was a challenging one with unprecedented currency devaluations," said Chairman, President and Chief Executive Officer A.G. Lafley. "Virtually every currency in the world devalued versus the U.S. dollar, with the Russian Ruble leading the way. While we continue to make steady progress on the strategic transformation of the company - which focuses P&G on about a dozen core categories and 70 to 80 brands, on leading brand growth, on accelerating meaningful product innovation and increasing productivity savings - the considerable business portfolio, product innovation, and productivity progress was not enough to overcome foreign exchange."

"The outlook for the year will remain challenging. Foreign exchange will reduce fiscal 2015 sales by 5% and net earnings by 12%, or at least $1.4 billion after tax. We have and will continue to offset as much of this currency impact as we can through productivity driven cost savings. And we will continue to invest in our businesses, brands and product innovation, because it is the right thing to do for the mid- and long-term, while we deliver another year of strong cash returns to shareowners. We are adjusting fiscal year earnings targets accordingly. We are mobilized to deliver another fiscal year of modest organic sales growth, and to continue to grow market share on more category-leading brands. We are working to deliver core earnings per share as close as possible to those of last fiscal year."

Fiscal Year 2015 Guidance

P&G maintained its organic sales growth and currency-neutral core earnings per share growth guidance ranges for fiscal year 2015. The Company expects significant negative sales and earnings impacts from foreign exchange in the second half of its fiscal year.

The Company maintained its guidance for organic sales growth in the low-to-mid single digit range. Net sales growth is now expected to be lower versus the prior fiscal year in the range of -3% to -4%, including a negative five point headwind from foreign exchange and a one point impact from minor brand divestitures.

P&G maintained its outlook for currency-neutral core earnings per share growth in the double-digits. Including currency impacts, Core EPS is now expected to be in the range of in-line to down low-single digits versus prior year Core EPS of $4.09. All-in GAAP diluted net earnings per share are now expected to be down in the mid-teens range versus the prior year. This includes approximately $0.67 per share of non-core charges, primarily from $0.20 per share of non-core restructuring charges and $0.58 of impairment charges, which are partially offset by approximately $0.14 of earnings from discontinued Batteries and Pet Care operations.

For earnings history and earnings-related data on Procter & Gamble (PG) click here.

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