P&G Exceeds Consensus Estimates for Quarter and Year

The Procter & Gamble Company, Cincinnati, OH, exceeded consensus expectations for fourth quarter and fiscal year results. The double-digit earnings growth and solid top line performance in the April-June quarter has resulted in the achievement of P&G’s long-term annual growth rate targets a year ahead of objective.

“This quarter concludes a strong fiscal year where we achieved long-term growth goals ahead of schedule and laid a solid foundation for future growth,” said chairman of the board and chief executive officer A. G. Lafley. “Our business results continue to be strong behind our focused strategies of improving consumer value, investing behind core brands and driving cost savings to the bottom line.”

For the quarter ended June 30, unit volume grew 10% versus the prior year led by double-digit growth in the health care and beauty care businesses, benefits of the Clairol acquisition and strong performance in fabric and home care. Net sales were up 6% to $10.17 billion.

Reported net earnings for the quarter were $910 million. Net earnings in the year-ago quarter were a loss of $320 million, which included a $1.16 billion after-tax restructuring charge.

For the fiscal year, unit volume grew 7% behind outstanding results in health care, as well as strong progress in the fabric and home care and beauty care businesses. Net sales were $40.24 billion, up 4% excluding a 1% negative foreign exchange impact. The combination of mix impacts and pricing changes, primarily funded by declining material costs, partially offset volume growth, according to executives. Net earnings for the year were $4.35 billion.

For the fiscal year the company has achieved its long-term growth objectives. These improvements reflect the benefits of strategic choices the company has made: sharpening the consumer value of P&G’s brands, continuing to invest in innovation, leveraging marketing strengths to build leading brands in core categories and focusing on financial discipline to drive cost savings to the bottom line.

On the fiscal year, strength in the oral care and pharmaceutical businesses drove a 15% increase in unit volume and a 14% increase in sales. Crest joined the ranks of P&G’s billion dollar brands behind the successful expansion of Crest Spinbrush and Crest Whitestrips, as well as strength in the core dentifrice business.

Fabric and home care delivered strong results this quarter with unit volume growth in every region. Unit volume for the quarter increased 6% driven by growth in Western Europe (both fabric care and home care) and North America home care. Sales were $2.93 billion, an increase of 3% excluding a 1% negative impact from foreign exchange on the quarter as pricing, promotion and mix impacts, primarily in Western Europe, partially offset increased volume.

For the fiscal year, fabric and home care delivered strong earnings driven by an excellent program of cost reduction and sharpened consumer value equation. Volume was up 3% and sales for the year were up 1% to $11.62 billion, excluding a 1% negative impact from foreign exchange. Executives said volume growth was partially offset by pricing investments to improve in store presence and the consumer value equation, primarily in Western Europe.

Beauty care continued to deliver strong results behind the Clairol acquisition, with quarterly unit volume and sales up 32% and 22%, respectively. Mix impacts driven by the Clairol business partially offset volume growth. Excluding acquisitions and divestitures, quarterly unit volume and sales grew 5% and 4% respectively, behind strength across all businesses.

Throughout the fiscal year, beauty care’s quarterly growth rates for unit volume and sales increased sequentially, delivering unit volume growth of 19% and sales growth of 13%, excluding a 2% negative foreign exchange impact. Excluding the impacts of the Clairol acquisition, fiscal year unit volume grew 3% behind strength in hair care.

For the July-September quarter, volume is expected to be up 8-10%. Sales are expected to grow in the 4-6% range. For fiscal year 2002/03, volume growth is expected to be modestly ahead of sales and the company expects sales growth to be in the 4-6% range. Core earnings per share is expected to grow at the company’s target rate of double-digits, according to P&G executives.