Procter & Gamble Co's profit rose more than expected, indicating that the world's largest household products maker is making progress after coming under pressure from activist investor William Ackman, and its shares soared to the highest level in four years.
Rival Colgate-Palmolive Co, meanwhile, said it plans to cut about 6 percent of its workforce over the next four years as it strives to operate more nimbly as economies slow in many countries. Its quarterly profit matched expectations. Several consumer goods makers are trimming jobs, including P&G, as concerned consumers hold off on some purchases and growth slows in major markets such as China.
P&G is on track to cut 4,200 jobs by the end of October on its way to eliminating 5,700 jobs by the end of its fiscal year. On Wednesday, Kimberly-Clark Corp said it would eliminate 1,300 to 1,500 jobs as it leaves some low-margin businesses in Europe. Colgate's plans, including moving away from single-country units toward regional hubs, should lead the toothpaste maker to trim about 2,300 jobs by the end of 2016. Shares of P&G rose 4 percent to $70.83 on Thursday, their highest level since October 2008. Colgate's shares fell 2.9 percent to $103.44.
Colgate's shares had risen 15 percent this year through Wednesday, while P&G shares were up less than 1 percent. P&G is cutting costs and narrowing its focus on key markets, products and countries. The company's goals as well as Chairman and Chief Executive Bob McDonald have been under intense scrutiny after Ackman bought shares this summer.
P&G earned $1.06 per share in the fiscal first quarter on a "core" basis, which excludes charges, up from $1.01 per share a year earlier. Analysts, on average, expected it to earn 96 cents per share, according to Thomson Reuters I/B/E/S. Earnings from continuing operations fell to $2.85 billion, or 96 cents per share, from nearly $3.0 billion, or $1.01 per share, a year earlier. P&G's net sales in the quarter fell 4 percent to $20.74 billion, below analysts' target of $20.78 billion. Organic sales, which strip out the impact of acquisitions, divestitures and foreign exchange, rose 2 percent, at the high end of the company's forecast.
P&G still expects to post core earnings per share of $3.80 to $4 this fiscal year. Analysts' average forecast for the year is $3.91 per share. For the current second quarter, P&G forecast core earnings of $1.07 to $1.13 per share, with organic sales up 1 percent to 3 percent. Colgate earned $1.38 per share, matching analysts' forecasts, while sales fell 1 percent to $4.33 billion.