P&G Expects Tough Times

Procter & Gamble Co. leaders expect another tough year for sales of consumer products, while saying Thursday they have aggressive plans to build up their market share against competitors during the recession.

The maker of Tide detergent, Gillette shavers and other familiar household brands offered a cautious outlook to analysts in New York on Thursday, projecting earnings per share in a range of $3.65 to $3.80 for the fiscal year that begins July 1. The company says that would represent growth at a rate of roughly zero to 4 percent compared with its estimates for the current year.

Analysts surveyed by Thomson Reuters had projected earnings per share of $3.91. However, analysts said P&G’s conservative forecast eased uncertainty after the world’s largest consumer products maker had delayed issuing projections earlier amid global economic volatility.

“We are relieved that the bar has finally been reset, which should allow for greater investor confidence going forward,” analyst William Chappell of SunTrust Robinson Humphrey said in a note to clients.

P&G shares rose 81 cents, or 1.6 percent, to close at $52.59. They have traded from $43.93 to $73.57 per share in the past year.

P&G officials led by A.G. Lafley, chairman and chief executive, said the company will step up business-building efforts in developing markets such as China, India and Brazil, invest aggressively in marketing and developing new products for its major brands, and continue cost-cutting and productivity moves.

“We want to position ourselves strategically and competitively to be even stronger coming out of the recession,” Jon Moeller, chief financial officer, told the Sanford C. Bernstein analysts conference. Moeller said P&G expects economic conditions to improve in the second half of its fiscal year, in 2010.

P&G has seen sales fall in the recession as consumers buy less and trade down. Officials told analysts they expect tough conditions to continue next year, with net sales ranging from up only 1 percent to falling 2 percent. The Cincinnati-based consumer products maker projects organic sales growth, or sales not related to acquisitions and other such changes, at only 1 to 3 percent for the coming year. P&G has in recent years had an annual organic sales growth target of 4 to 6 percent.

“Despite these challenges, we expect to continue to grow,” Lafley said. “Most importantly, we will grow our share. And we are prepared to invest to do just that.”

Lafley indicated P&G is also considering price cuts or offering lower-priced products, but declined to go into detail on strategy for competitive reasons. Lafley said the company will offer a range of prices and products to suit different household budgets.

P&G officials also said they will double over the next five years their reach into retail outlets in developing markets.