P&G Earnings Rise in Second Quarter

The Procter & Gamble Co., Cincinnati, OH, said net income for the second quarter ended Dec. 31 rose 9%. Sales rose 2% to $10.4 billion, supported by launches of Crest Whitestrips and other beauty care products. This was the first sales increase the company has posted in more than a year and is largely the result of job cuts, the elimination of smaller or underperforming brands and other cost-saving measures, executives said.

The maker of Folgers coffee, Crest toothpaste and Pampers diapers posted net income of $1.3 billion, up from $1.19 billion last year. Unit volume increased 15% with the acquisition of Clairol products in the beauty care category. Beauty care net sales totaled $2.06 billion for the quarter, an increase of 13% from the year before. Strong hair care sales were led by Pantene, Head & Shoulders and Clairol brands.

In the fabric care category, net sales were $2.97 billion, up 1% for the quarter. Fabric care net earnings rose 12% to $437 million due to increased marketing support efficiencies and disciplined cost management in North America and Western Europe, P&G executives said.

Many analysts had raised their second quarter estimates, after P&G said in December that earnings would come in higher than Wall Street forecasts at the time.

“We are seeing clear improvements in our results, and we’re pleased to have met our commitments once again,” said P&G president and chief executive officer A.G. Lafley. “We’re continuing our unyielding focus on delivering better consumer value on our brands, building core categories, reducing the company’s cost structure and improving our cash flow.”

The company said it expects sales volume to rise at a high single-digit percentage rate in the third quarter, with sales rising in the mid-single digits, excluding foreign exchange. The company also reaffirmed its full-year forecast of core earnings-per-share growth accelerating from the previous year, but not yet reaching double digits.

Sales, excluding foreign exchange, are expected to be at or ahead of last year’s growth rate and approaching the target range of 4% to 6%. Volume growth is projected to be in the mid-single digits, executives said.