P&G; Posts 9% Increase in Quarterly Earnings

Procter & Gamble Co. reported a 9% rise in quarterly profit Monday, but lower margins and a forecast that failed to top Wall Street estimates led to profit taking in a stock that ran up in July with the rest of the market.

Net income increased to $1.49 billion, or 56 cents a share, from $1.37 billion, or 50 cents, a year earlier, the Cincinnati-based company said. Sales in its fiscal fourth quarter ended June 30 climbed 10% to $14.26 billion.

Procter & Gamble was forecast to earn 55 cents a share, the average estimate of analysts surveyed by Thomson Financial.

Sales were led by a 13% gain in the family health unit, which includes heartburn drug Prilosec, and demand in emerging markets such as China and Russia. But Chief Executive A.G. Lafley said that commodity costs were hurting profit margins and that he would spend more on marketing if rivals such as Colgate-Palmolive Co. cut prices.

P&G; and other consumer product makers have been trimming expenses and raising prices to mitigate the effects of rising raw material costs.

Although many of the price increases have held, P&G; has had trouble raising prices in laundry care, executives said. Profit in the fabric and home-care business, which includes laundry soap, fell 11% in the quarter, the only segment to see a decline, the company said.

Shares of Procter & Gamble fell 31 cents Monday to $55.32, and are nearly unchanged year to date. The company said it was “comfortable” with analysts’ earnings estimates for the current quarter and the new full fiscal year, disappointing investors who hoped P&G; would raise its growth outlook.

P&G; is broadening its offerings to include more low-price and mid-price products for developing countries as well as for budget-conscious consumers in developed markets.

The company agreed in January to buy Gillette Co., the world’s largest razor maker. Gillette, which also makes Duracell batteries, will help P&G; push into faster-growing markets such as Brazil and India and add more grooming products.

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Reuters and Bloomberg News were used in compiling this report.