Procter & Gamble earnings jump 33%
Consumer products company Procter & Gamble Co. said Tuesday that its fiscal first-quarter profit climbed 33%, boosted by sales from Gillette and improved margins.
The Cincinnati-based maker of such products as Pampers diapers, Tide detergent and Crest toothpaste also lifted its full-year earnings outlook, citing an improved forecast for commodity and energy costs.
Net income for the quarter ended Sept. 30 rose to $2.7 billion, or 79 cents a share, from $2.03 billion, or 77 cents, a year earlier.
Revenue increased 27% to $18.79 billion on strong results from Gillette and the company’s base business.
Analysts polled by Thomson Financial were expecting earnings of 78 cents a share on sales of $18.56 billion.
Profit margins expanded during the quarter as sales growth, cost savings projects and the benefit of adding the higher-margin Gillette business more than offset acquisition-related expenses and higher commodity costs.
Procter & Gamble’s $57-billion acquisition of Gillette closed Oct. 1, 2005. The company noted that the next quarter would be the first in which Gillette results would be included in P&G;’s organic sales, which exclude the effects of acquisitions and divestitures.
“The integration appears to be going as well as expected,” said Patrick Schumann, an analyst with Edward Jones & Co. in St. Louis. “We believe Gillette is going to be a tremendous addition over the long term.”
The company lifted its full-year earnings guidance to $2.97 to $3.02 a share on a better commodity and energy cost forecast. This includes Gillette dilution, which is expected to be in the range of 12 cents to 18 cents a share. Procter & Gamble also said it anticipated full-year sales to increase by 9% to 11%.
Second-quarter earnings are forecast at 81 cents to 83 cents a share, with sales expected to rise 5% to 8%.
The company’s shares fell 42 cents to $63.39 on Tuesday after hitting an intraday record $64.02 on Monday. The stock retreated after first-quarter sales missed some analysts’ forecasts. Shares have been as low as $52.75 in the last year.
