P&G quarterly profit drops, but stock holds steady
The consumer products maker says higher materials costs hurt its margin in the quarter.
Sales came in slightly under Wall Street estimates. Still, the stock proved resilient enough to gain slightly in morning trading.
The big story for the quarter was higher commodity costs -- and whether the company will have to raise prices in a struggling economy to offset those new expenses. Chief executive Bob McDonald said P&G will try to cut costs instead of increase prices, according to Dow Jones.
But if price hikes are necessary, he said, the company will deal with those by launching innovative new products.
"The pricing is not becoming more benign in the industry," a Sanford Bernstein analyst told Reuters. "Competition is still high."
P&G's quarterly profit dropped to $3.08 billion, or $1.02 a share, compared with $3.31 billion, or $1.06 a share, from the year-ago period. That beat the $1 a share analysts were looking for.
The profit picture declined in part because the quarter didn't include the global pharmaceuticals business that P&G sold last October.
Revenue gained 2% to $20.12 billion, slightly less than the $20.24 billion analysts expected. The volume of products shipped grew by 8%.
Kimberly-Clark (KMB), a rival of P&G, disappointed analysts with its quarterly earnings Tuesday, citing sluggish sales despite lower prices, Reuters reported.
McDonald described consumer demand as "dampened" in the U.S. That's why the company is hesitant to raise prices even as its cost of materials is increasing.
For the current quarter, investors will focus on whether the company can cut back enough to offset those commodity costs.
P&G was optimistic for the quarter, forecasting a profit of $1.05 to $1.11 a share and an increase in net sales growth of 2% to 4%. Organic sales, which exclude acquisitions and foreign currency effects, should be up by 3% to 5%.
Analysts are expecting a $1.11 per-share profit in the quarter, according to Reuters, and a 1% increase in revenue to $21.27 billion.
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.
[BRIEFING.COM] The S&P 500 ended this week with a bang, roaring to a new all-time high on the back of stronger-than-expected economic data, influential leadership, and an ongoing appreciation for the Fed's monetary policy support.
The bullish bias was evident in premarket action as the S&P futures pointed to a higher start without the benefit of any definitive news catalyst. Stocks indeed benefited from a blast of buying interest at the opening bell on this ... More
More Market News
|There’s a problem getting this information right now. Please try again later.|
LATEST MARKET DISPATCHES
- No more Dispatches; here's where to find market news
The Market Dispatches column has been discontinued. Here's where to find the latest stock and business news on MSN Money, and the latest from market writer Charley Blaine.
- Dow falls 59 as late-day gloom kills a rally
- Stocks held back by fiscal-cliff worries
- Stocks suffer worst weekly loss in 5 months
- Dow off 121 as post-election swoon continues
- Dow slumps 313 after Obama's re-election
- Dow jumps 133 as Americans head to the polls
All hail the bull market, which ended the week with a big rally. But it also is starting to look a little like 1987, which suffered an epic blow-out.