Procter & Gamble Co, the maker of Crest toothpaste and Tide laundry detergent, posted a 4 percent rise in quarterly profit on Tuesday, as strong sales of health and beauty items offset rising raw material costs and the impact of hurricanes on its coffee business.
P&G, which acquired Gillette Co earlier this month, said earnings rose to $2.03 billion, or 77 cents per share, in its fiscal first quarter ended September 30, from $1.94 billion, or 70 cents a share, a year earlier.
Analysts, on average, expected Cincinnati-based P&G to earn 76 cents per share, according to Reuters Estimates.
"Today's release should provide another measure of comfort that PG is in great shape to integrate (the) transforming Gillette acquisition," said Deutsche Bank analyst William Schmitz, who rates the shares as "buy."
Like other consumer products companies, P&G has been hit with higher raw materials costs, and is changing manufacturing formulas and seeking other ways to cut spending. P&G and others in the sector have raised prices to pass on higher costs to customers.
P&G was forced to shut coffee operations in New Orleans due to Hurricanes Katrina and Rita, hurting production of its Folgers and Millstone brands. The company said Hurricane Katrina cut operating earnings by about 2 percent.
P&G would have beat expectations by 3 cents, excluding the impact of Hurricane Katrina, said Morgan Stanley analyst Bill Pecoriello, who has an "overweight" rating on P&G shares.
Net sales rose 8 percent to $14.79 billion, in line with analysts' expectations, driven by new products such as Tide with Febreze, favourable foreign exchange rates and price increases. Unit volume rose 6 percent. Sales in the snacks and coffee business fell 5 percent to $706 million, weighed down by hurricane disruptions.
For the fiscal second quarter, P&G forecast net sales growth of 23 percent to 26 percent, with 20 percent to 21 percent coming from acquisitions and divestitures. Earnings per share for the quarter, including Gillette, should be 66 cents to 69 cents, P&G said.
P&G forecast fiscal-year sales growth of 17 percent to 19 percent, including 14 percent to 15 percent from acquisitions and divestitures.