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P&G To Take Charge Over Venezuela Devaluation

Currency hit could cost $275 million in Q3.

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By: TOM BRANNA

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Procter & Gamble is the latest company to feel the effects of Venezuela’s currency devaluation. The company expects to take $200 million to $275 million in one-time charges—the biggest charge a company has disclosed related to the devaluation.


Procter & Gamble lowered its third-quarter and fiscal-year income guidance to reflect the new exchange rate and its effects on functions like importing finished products and raw materials. The company said those items will reduce its fiscal 2013 net income by 3 cents a share, and if the bolivar remains at current levels, annual profit will be reduced by 6 to 7 cents a share.
The company also said it will take between 7 and 9 cents per share in one-time charges this year because of the devaluation. Procter & Gamble’s fiscal year ends June 30.
P&G now expects annual profit of $3.94 to $4.04 per share excluding one-time items. That’s down from its previous estimate of $3.97 to $4.07 per share. The company expects to earn between 90 and 96 cents per share in its fiscal third quarter, down from 91 to 97 cents per share. Analysts expected net income of $4.07 per share for the year and 97 cents per share in the third quarter, according to FactSet.
The new government-set rate of 6.30 bolivars to the dollar is down from the previous rate of 4.30 bolivars to the dollar. Venezuela relies heavily on imports and on oil sales in dollars, and the government hopes to reduce the amount of money it needs to borrow.

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