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P&G Cuts Earnings Outlook

February 12, 2014

Currency woes in emerging markets to blame

Procter & Gamble says currency rate changes in Venezuela, Argentina and other developing countries are hurting its profitability and therefore has cut its earnings outlook for the year. It expects that earnings will grow 3 to 5%, excluding one-time items, rather than its prior forecast of 5 to 7%. It still expects revenue to rise 3 to 4%when stripping out the effect of acquisitions and foreign exchange rates.

Procter & Gamble Co., like other consumer products makers, has turned to emerging markets to increase its sales amid slow growth in developed markets. Developing countries now account for about half of P&G's revenue, but the growth rate there is now slowing too.

The maker of products including Tide detergent and Crest toothpaste said in its most recent quarterly report that it sales were in line with trends in the overall consumer market industry, which had flat to 1% growth in developed markets and was up 7 to 8% in developing markets.

Hurting its outlook for the year is a change in government policy in Venezuela related to foreign currency rates and the recent slump in currency values in Argentina, Turkey, South Africa and other developing countries.

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