Procter & Gamble Co posted a higher-than-expected quarterly profit despite a drop in sales, just weeks after the world's largest household products maker took the blame for its disappointing performance and said it was focusing on ways to improve.
The results, released on Friday, are being watched closely for any early signals of how well P&G and its current leadership can fix a long list of problems, especially after activist investor William Ackman stepped in and bought about $1.8 billion worth of its shares.
P&G's forecast for the current quarter sits below Wall Street's estimate, suggesting it could take several more months before the bulk of the company's restructuring efforts pay off. "We have a dialogue with Pershing just as we do with all investors, but of course we keep the content of these discussions confidential to protect the interests and proprietary thoughts of our investors," Chief Executive Officer Bob McDonald told reporters on a conference call on Friday.
P&G also said it would repurchase $4 billion worth of its shares this fiscal year. In June it said it did not expect to do so because it wanted to preserve its credit rating. Chief Financial Officer Jon Moeller said P&G had changed its mind because it had growing confidence in its turnaround plan and more cash on hand than it had anticipated in June, while interest rates continued to fall.
Shares of P&G, a component of the Dow Jones industrial average, were up 2.2 percent at $64.93 in early trading. P&G has struggled as growth dropped off significantly in developed markets, which make up 60 percent of sales, while in emerging markets, it is dealing with mandated price cuts in Venezuela and import curbs in Argentina. The company's job cuts are coming in ahead of schedule. P&G planned to eliminate 10 percent of its 57,000 nonmanufacturing jobs, with 1,600 layoffs expected in fiscal 2012 and another 4,100 during fiscal 2013.
P&G had eliminated 2,000 jobs by June 30, the end of fiscal 2012, and has cut 5 percent of nonmanufacturing jobs to date. It now expects to complete the majority of the 10 percent headcount reduction by the end of this calendar year, McDonald said. P&G said it had earned $3.63 billion, or $1.24 per share, in the fourth quarter ended on June 30, compared with $2.51 billion, or 84 cents per share, a year earlier. Core earnings, or profit from continuing operations excluding items, were 82 cents per share, in line with a year earlier. That surpassed the company's June forecast of 75 cents to 79 cents and the analysts' average estimate of 77 cents, according to Thomson Reuters I/B/E/S.
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