P&G profits slump on restructuring charges, but share prices rise

By Simon Pitman contact

- Last updated on GMT

Related tags: Foreign currency translations, Chief executive officer, Organic growth

P&G profits slump on restructuring charges, but share prices rise
Procter & Gamble reported a stronger increase in its fourth quarter sales, but beauty and grooming sales are steady, while profits are down as the company continues to pay out to streamline the business.

The company reported that net sales were up 4 percent in organic terms and 5 percent in volume, while the rise in reported sales came in at 2 percent to reach $20.7bn, a figure that was negatively impacted from foreign currency translations by 2 percent.

Net income dropped 48 percent to $1.87bn, mainly down to write-downs relating to the restructuring of the Braun Appliance business, together with other one-time costs mostly relating to restructuring.

Results beat expectations

The results beat the investment world’s expectations, with share prices rising by about 2 percent on the close of trade yesterday, as investors raced to buy up stock at lower prices.

“The Company met its objectives for the fourth quarter and fiscal year, and we will build on these results in fiscal 2014,”​ said newly reinstated Chairman, President and Chief Executive Officer, A.G. Lafley.

“We will continue to make choiceful investments in core brands, our biggest innovation opportunities, and in our core developed and most promising developing markets.”

For the full fiscal year, net sales increased 1 percent to $84.2bn, while volume growth was 2 percent and pricing added 1 percent, and unfavorable foreign currency translations hit the results by 2 percent.

Beauty and grooming sales are steady

The company’s mainstay beauty sales for the quarter were up 1 percent in reported terms to $4.85bn, while grooming sales were down 1 percent to $1.98bn, a performance that was counterbalanced by a better performance from the health care and home care businesses.

For the beauty division, the company said that sales were down for hair care, hit by pricing adjustments and currency translations, while this performance was propped up by high single digit growth in the personal beauty category.

In the grooming segment the company said that the driving force for this business division was sales of blades and razors in the developing market, but this performance was hampered by slower sales in developed markets, mainly stemming from southern Europe.

Looking ahead to fiscal 2014, the company is predicting organic sales growth in the range of 3 to 4 percent, which is line with underlying global market growth of around 3.5 percent. Reported sales are predicted to rise by between 1 to 2 percent, when factoring in currency translations.

Related topics: Business & Financial

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