Profits Jump 14 Percent at Procter & Gamble

Procter & Gamble Co. said Tuesday that strong growth in developing markets helped power earnings 14 percent higher in the third quarter for the world’s largest consumer product company.

P&G said net income in the three months ended March 31 climbed to $2.51 billion, or 74 cents per share, from $2.21 billion, or 63 cents per share, in the year-earlier period. The Cincinnati company also improved its full-year earnings target on the strong quarterly sales.

However, the result failed to beat expectations of analysts polled by Thomson Financial, a day after investors drove the stock up $1.42, or 2.3 percent in anticipation of the earnings report. P&G shares fell $1.61, or 2.5 percent, to $62.79 in afternoon trading on the New York Stock Exchange. The shares have traded in a 52-week range of $52.75 to $66.30.

Sales rose 8 percent to $18.69 billion from $17.25 billion a year ago, exceeding Wall Street’s forecast for $18.56 billion. The company said pet-care sales were down after it voluntarily recalled Iams and Eukanuba pet food in March after an industrywide recall of wet-style pet food produced by Menu Foods that included more than 100 brands.

The company reported double-digit volume growth by established brands such as Tide detergent, Head & Shoulders shampoo, Charmin toilet paper, Olay skin care, and Prilosec OTC heartburn medicine and also double-digit growth in developing markets.

P&G said, for example, that hair-care product growth has been especially strong in China, where sales are heading toward $1 billion. The company said Gillette blades and razors volume increased in developing regions.

“Developing markets are an engine of growth and will continue to be an engine of growth,” A.G. Lafley, the company’s chairman, president and chief executive, told analysts in a conference call. “And we’re building off a pretty big base now.”

For the full year, the company now projects earnings of $3.01 to $3.03, raising the bottom of its earlier forecast of $2.99 to $3.03 per share. The earnings forecast includes the impact from P&G’s 2005 Gillette Co. acquisition, which the company says will come in at the low end of its guidance for 12 cents to 18 cents per share. The company expects total sales to increase 11 to 12 percent for the year.

For the first nine months of the fiscal year, net earnings were up 19 percent at $8.07 billion, or $2.37 a share, compared with $6.79 billion, or $2.10 a share, a year ago. Net sales increased 14 percent to $57.20 billion from $50.38 billion.