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Apr-30-2008P&G; shares climb on profit growth(topic overview)
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The company's nine-month period net sales were $62.24 billion, up 9% from $57.20 billion last year. Going ahead, P&G; expects its second-quarter total net sales to increase 8% to 10%, with organic sales growth of 4% to 6%. The company currently sees fiscal 2008 earnings per share in the range of $3.48 - $3.50, compared to its prior outlook range of $3.46 - $3.50, due to the strong third quarter results. [1] A.G. Lafley, chairman and chief executive officer, said in a statement, "P&G; delivered strong results in-line with long-term targets in a challenging economic and competitive environment with broad-based sales and share growth, earnings growth and overhead cost improvement." Looking ahead, P&G; predicted that its earnings for the full year will be between $3.48 and $3.50 per share. This was up from its prior earnings forecast of $3.46 to $3.50 per share.[2] "P&G; delivered strong results in line with long-term targets in a challenging economic and competitive environment with broad-based sales and share growth, earnings growth and overhead cost improvement." The company increased its full-year outlook. It now sees a profit of $3.48 to $3.50, up from its prior guidance range of $3.46 to $3.50. That's in line with analysts' profit expectation of $3.49 a share.[3]
PG said it expects fourth-quarter earnings of 76 cents to 78 cents a share. The company raised its full-year earnings forecast to $3.48 and $3.50 a share. The bottom end of its range was previously $3.46 a share. "PG has seen limited trade down to private label in its categories despite the U.S. economic slowdown," SunTrust Robinson Humphrey analyst William Chappell wrote in a research note. "It is seeing a consumer shift to club, dollar and mass channels, but its overall growth rate in the United States is relatively unchanged in the past six months," wrote Chappell, who has a "neutral" rating on the stock.[4]
Managed health care service provider Humana (HUM 44.88) recently saw its stock price take a precipitous drop after slashing its first quarter and full-year outlook amid rising health care costs, higher claims volume, and, undoubtedly, tight competition. Humana initially forecast earnings of $0.80 to $0.85 per share for its first fiscal quarter, but lowered that range to $0.44 to $0.46 per share. The company announced this morning it earned $0.47 per share, which is just $0.02 better than analysts' reduced estimate and $0.05 better than last year.[5] CINCINNATI (AP) — Procter & Gamble says its third quarter profit rose 8 percent as cost controls and price increases helped offset higher commodity costs. The Cincinnati-based consumer product maker said Wednesday its profit rose to $2.71 billion, or 82 cents per share, compared with $2.51 billion, or 74 cents per share, a year ago.[6] Advancing sales and tight expenses helped Procter & Gamble Co. post an 8 percent profit gain in its fiscal third quarter, a period when rising fuel and commodities prices threatened to reduce its margin. The Cincinnati-based consumer products maker said its profits rose to $2.7 billion, or 82 cents per share, from $2.5 billion, or 74 cents, a year before.[7]
The world's largest consumer products maker, with brands ranging from Pampers diapers to Olay skin-care products, reported fiscal third-quarter earnings of $2.71 billion, or 82 cents a share, compared with $2.51 billion, or 74 cents per share, a year earlier.[8] The maker of Tide laundry detergent and Pampers diapers reported third-quarter net earnings of $2.71 billion or $0.82 per share. This compared to $2.51 billion or $0.74 per share in the same quarter last year.[2]
The maker of Pampers diapers and Gillette razors reported profit of $2.71 billion, or 82 cents per share, for the January-March period compared with $2.51 billion, or 74 cents per share, a year ago.[9]
DOW JONES NEWSWIRES Procter & Gamble Co.' s (PG) fiscal third-quarter net income rose to $2.71 billion, or 82 cents a share, from $2.51 billion, or 74 cents, a year earlier, helped in part by cost control and higher grooming sales.[10] NEW YORK (Thomson Financial) - Procter & Gamble Wednesday reported fiscal third-quarter earnings of $2.71 billion, or 82 cents a share, up from a year-ago profit of $2.51 billion, or 74 cents a share, and a penny ahead of the mean estimate of analysts polled by Thomson Reuters for earnings of 81 cents a share in the March period.[11] For the quarter ended March 31, Procter & Gamble posted net income of $2.71 billion, or 82 cents a share, compared with $2.51 billion, or 74 cents a share, a year earlier.[12]
The Cincinnati, Ohio-based company posted a net profit of $2.71 billion, or 82 cents a diluted share, vs. $2.51 billion, or 74 cents a diluted share, in the year-ago period.[3]
Analysts, on average, forecast $1.12 per share. For the year, management padded its earnings estimate a bit and expects profits to range from $4.10 to $4.30 per share on sales of $28 billion to $30 billion, which is in-line with the current consensus.[5] Kellogg expects earnings to range from $2.92 to $2.97 per share on organic sales growth at a single-digit rate. Analysts are taking a more aggressive stance, pegging their full-year consensus earnings estimate at $2.99 per share.[13]
The company expects fourth quarter earnings to range from $0.76 to $0.78 per share on solid revenue gains. Organic sales are expected grow 4% to 6%, in-line with its initial full-year goal, while total net sales are expected to increase 8% to 10%. Management also raised the low end of its full-year outlook by $0.02 and now expects earnings to range from $3.48 to $3.50 per share in 2008.[14] The money has been well-spent, spurring robust revenue growth and a couple quarters of positive earnings per share results. Avon announced this morning it expects its restructuring plan to net $270 million in savings this year, and $300 million in savings next year.[15] Visa reported net revenue for the quarter totaled $1.5 billion and adjusted earnings totaled $0.52 per share.[16] Telecom giant Verizon (VZ 37.04) announced earlier this morning first quarter adjusted earnings totaled $0.61 per share on sales of $23.8 billion, both of which matched analysts' expectations.[17] First quarter earnings totaled $0.47 per share, excluding $0.04 attributable to restructuring charges.[15] Adjusted earnings totaled $2.59 per share during MasterCard's first quarter.[18] Media company CBS Corp. (CBS 22.54) announced this morning that earnings for its first quarter topped estimates and climbed 9% year-over-year, despite an unchanged top line. The company earned $0.36 per share for its most recent quarter.[19] The company's second quarter outlook brackets the average earnings estimate; management expects that earnings will range from $0.26 to $0.31 per share, while analysts are calling for earnings of $0.28 per share.[20] The dour review threatens future sales of the two drugs and challenges Merck to find replacements. The company continues to stand by its full-year outlook and expects to grow adjusted earnings at a double-digit rate through 2010. Management expects earnings will range from $3.28 to $3.38 per share, excluding extraordinary items, for its current fiscal year.[21] Focusing on higher margin product sales will help pad profits. The company's interest in pursuing strategic alternatives for its coffee business is a laudable step toward paring its dependence on lower margin products. Though a divestiture would detract from earnings, Procter & Gamble has plenty of cash and free cash flow to buyback shares to help it meet its targeted annual earnings per share growth rate of 10% or better.[14] CINCINNATI (AP) — Consumer products maker Procter & Gamble Co. said Wednesday price increases, cost controls and strong growth in emerging markets helped offset soaring costs of oil and other commodities as its third quarter profit rose 8 percent. P&G; also lifted its full-year outlook, and its shares rose 3 percent in morning trading.[9] Net sales advanced 9.7% to $4.81 billion from $4.39 billion a year ago. Procter & Gamble said that net sales of its beauty products rose 9% in the quarter to $4.7 billion, helped by 3% volume growth and a 6% favorable foreign exchange impact.[1] Sales totaled $20.46 billion in the three-month period, up 9% from $18.69 billion a year earlier and ahead of the average analysts estimate of $20.2 billion. The company said organic volume and sales both rose 5% in the latest quarter. This quarter is yet another demonstration of the power of P&Gs; product category and geographic diversification and disciplined focus on cash and cost productivity, said A.G. Lafley, the companys chairman and chief executive officer.[11] Ten Wall Street analysts had a consensus revenue estimate of $20.4 billion. P&G; said its organic volume and sales were both up 5%. The company pointed out that 5 of the its 6 segments delivered mid-single digit or higher organic volume growth. The company's operating margin improved 60-basis points from last year, due to the impact of cost savings projects and synergy benefits from its integration of Gillette, as well as improved overhead costs and volume leverage. These factors more than offset higher commodity costs.[2]
The company's quarterly operating profit rose 13% from last year to $4.11 billion, driven by higher net sales and operating margin growth.[1] Grooming net sales totaled $2.0 billion, up 13% from last year, supported by 6% volume growth and a 7% favorable foreign exchange impact.[1] Snacks, coffee and pet care net sales totaled $1.2 billion in the quarter, up 11% from last year.[1]
Net sales for the quarter rose to $20.46 billion. This was up 9% from $18.7 billion in the comparable quarter a year ago.[2]
Net earnings rose 30% for the quarter to $403 million on the back of higher net sales, lower overhead spending and a more profitable product mix.[1] Net earnings grew 23% to $471 million as net sales growth, cost savings projects and a more profitable product mix more than mitigated higher commodity costs.[1] Net earnings were down 2% to $589 million as the net sales growth was more than offset by higher commodity costs and base period gains from minor Wella fragrance brand divestitures.[1]
Net earnings rose 15% to $617 million on net sales growth and improved overhead expenses as a percent of net sales.[1]
PG has averaged annual double-digit earnings growth, sales have nearly doubled since 2000 to $76.5 billion (48.9 billion) last fiscal year, and shares hit a series of record highs, the latest in December at $75.18 before sliding back.[22] Revenues were a bit shy of the $4.8 billion consensus sales estimate, but earnings per share climbed more than 30% to top the $0.67 consensus EPS estimate.[23] Analysts predicted profit of 81 cents per share on revenue of $20.43 billion, according to Thomson Financial.[24] Analysts expect $3.49 per share. For the first nine months of its fiscal year, the company earned $9.06 billion, or $2.72 a share, up from $8.07 billion, or $2.37 a share, a year earlier.[9] Procter & Gamble generated earnings of $0.82 per share, up almost 11% from one year ago and a penny more than the $0.81 per share that analysts came to expect.[14] Street analysts forecast earnings of $3.49 per share for the fiscal year 2008.[1] On a per share basis, earnings rose 11% from last year and topped analysts' forecast by a penny. The Cincinnati, Ohio-based company also raised the lower end of its earnings per share outlook for fiscal 2008.[1]
Shares in P&G; rose $1.91 in morning trading, to $67.81. Encouraged by its performance, P&G; (NYSE: PG) raised the low-end of its fiscal earnings expectations, to $3.48 to $3.50 per share, from $3.46 to $3.50.[7] Consumer staples giant and Dow Jones component Procter & Gamble (PG 67.83, +1.93) is trading higher in Wednesday's early action. Shares of P&G; are attracting buyers after the company posted better than expected earnings per share results and offered investors reassurance its margins could weather the test of higher input costs.[14] While commenting on the third-quarter results, A.G. Lafley, chairman of the board and chief executive officer of Procter & Gamble, said, 'P&G; delivered strong results in-line with long-term targets in a challenging economic and competitive environment with broad-based sales and share growth, earnings growth and overhead cost improvement."[1]
P&G; projected that Fusion, the five-blade razor system introduced two years ago, will top $1 billion in sales for the fiscal year, making it P&G;'s 24th billion-dollar brand and the fastest to reach that level. Pampers, for example, had growth rates in the high-teen percentages in emerging markets such as China, Russia and Poland, P&G; said. Pantene shampoo had strong growth in China and Brazil, but was slow in U.S. markets, as were some other beauty product areas such as higher-end, "prestige" product sales in department stores. A.G. Lafley, P&G;'s chairman and chief executive, said the company remains optimistic about continued growth for its many well-known household brands such as Charmin toilet paper, Crest toothpaste and Tide detergent, even in a slumping U.S. economy.[9] Analysts had forecast $20.43 billion in sales. "This quarter is yet another demonstration of the power of P&G;'s product category and geographic diversification and disciplined focus on cash and cost productivity," Chairman and CEO A.G. Lafley said in a company statement.[3] Analysts expect $3.49. "This quarter is yet another demonstration of the power of P&G;'s product category and geographic diversification and disciplined focus on cash and cost productivity," Chief Executive Officer A.G. Lafley said in a press release.[7]
Chief Executive Officer A. G. Lafley is divesting underperforming businesses and adding health and beauty products to boost P&G;'s 10 percent share of that $350 billion market, said Bill Pecoriello, a New York-based analyst with Morgan Stanley, in an April 24 report. He rates the stock "overweight.''[25] Annual profit will be $3.48 to $3.50 a share, up from a projection of at least $3.46, P&G; said today, sending the shares up the most in more than a year in New York trading. Consumers in China, India and Latin America bought more shampoo and makeup as their standards of living improved. Those sales helped overcome a drop in U.S. demand, where customers worried about job losses and higher energy expenses slowed spending.[26] The Cincinnati-based maker of Tide detergent and Crest toothpaste may have sales of $20.4 billion, a 9 percent increase. Consumers in China, India and Latin America are buying more Fusion razors, Oral B toothbrushes and Pampers diapers as their standards of living improve. Those sales, bolstered by the U.S. dollar's decline, probably helped overcome slumping demand in the U.S. and Western Europe, where P&G; has raised prices and higher energy costs have slowed consumer spending.[25] The continued increases in plastics and energy prices took a 2.2 percent toll, and P&G;'s gross margin declined by 0.3 percent, to 51.3 percent of net sales during the quarter. P&G; managed to offset most of this negative impact through volume, pricing and cost savings. P&G;'s free cash flow (operating cash flow minus its capital expenditures) represented 136 percent of its net earnings in the quarter and 109 percent for the year, ahead of its 90 percent goal.[7]
The consensus called for a loss of $1.60 per share. Detroit's automakers have been battling to restructure and winnow their bloated cost structures for some time, frequently engaging in specialty sales events intended to clear inventory. Those efforts are having a limited effect in the face of rising material costs, record fuel prices, and challenging macro trends, not to mention stiff competition. Those trends have proved too much for investors. After seeing its share price advance in the early part of the year the stock is now trading lower year-to-date. As of yesterday's close, shares of GM are down nearly 15% this year.[27] Publishing remains challenged by increasing demand for online media and less paper products; the segment's sales fell 12% year-over-year to $201 million. Separately, strong cash flow prompted the company to increase its quarterly dividend by 8% to $0.27 per share. At their current price, shares of CBS yield nearly 4.8%.[19] The company's net income was $440.9 million, or $1.04 per share, compared to $452 million, or $0.98 per share, in the prior-year quarter.[1]
Kellogg earned $0.81 per share, up 15% from the prior year. Despite the quarter's solid earnings per share results, management is maintaining its earnings outlook for the full-year.[13] Colgate's adjusted earnings totaled $0.90 per share, up nearly 17% from the prior year.[28]
Earnings per share totaled $2.72, a 15% increase from $2.37 in the same period last year.[1]
Express Scripts (ESRX 71.47) announced after Tuesday's close that its top line rose 2% year-over-year to $4.6 billion and earnings totaled $0.70 per share.[23]
On average, 16 analysts polled by First Call/Thomson Financial expected earnings of $0.81 per share for the third quarter.[1] Analysts expect $3.49 per share. It expects fourth-quarter earnings of 76 cents to 78 cents per share while analysts expect 78 cents per share.[24] ANALYST TAKE: Deutsche Bank analyst Bill Schmitz Jr. said he expects P&G; to report earnings of 82 cents per share, helped by the benefit of a weaker dollar and a lower-than-expected tax rate. He expects total sales to grow about 10 percent, with the weaker dollar accounting for about half of that.[29]
Analysts currently expect earnings will total $3.30 per share in 2008. Shares of Merck are trading nearly 10% lower this session, back near their 52-week low.[21]
Sysco's diluted earnings per share climbed 14% year-over-year to $0.40 per share. Shares of SYY have lost 10% of their value this year. Just 6% off its 52-week low, the stock currently trades at 16.1x trailing earnings, well-below its historical average of 23.5x trailing earnings.[30] For the June quarter, P&G; predicted earnings of $0.76 to $0.78 per share.[2] Tyson's second quarter resulted in a loss of $0.02 per share, or earnings of $0.06 per share after excluding charges related to plant closings and asset impairments.[31] On average, fourth quarter earnings are expected to total $0.78 per share, while full-year earnings are expected to total $3.49 per share.[14]
Dean Foods reported that first quarter profits totaled $0.23 per share, or $0.05 better than the $0.18 consensus EPS estimate.[20] General Motors announced a first quarter loss of $0.62 per share, excluding items.[27]
Under the agreement Wrigley will become a separate, stand-alone subsidiary of Mars. The announcement has completely overshadowed Wrigley's first quarter earnings results, which were pleasing in their own right. Shareholders of Wrigley will receive $80 in cash for each of their shares, which represents a premium of more than 25% over last week's closing price.[32]
P&G; said it expects fourth-quarter earnings of 76 cents to 78 cents a share. The company raised its full-year earnings forecast to $3.48 and $3.50 a share. The bottom end of its range was previously $3.46 a share.[8] For fiscal 2008, the company sees earnings of $3.48 to $3.50 a share, up slightly from a prior projection for a profit of $3.46 to $3.50 a share.[11]
The company had previously expected earnings of $3.46 to $3.50 a share.[10]
Looking ahead, Procter & Gamble now forecasts earnings of $3.48 to $3.50 a share.[10] According to First Call, the most pessimistic view also calls for earnings of $1.20 per share, though, the average forecast calls for earnings of $1.27 per share.[20] Earnings per share were $0.03 better than the consensus estimate of $0.33 per share.[19] Earnings per share climbed an impressive 22% year-over-year to $0.61 per share.[32]
P&G;'s earnings per share results have either met or surpassed analysts' consensus projection in each of the last 10 quarters.[14] Avon's adjusted earnings per share climbed nearly 38% when compared with last year's results.[15]
Year-over-year, sales climbed more than 5% and earnings per share climbed nearly 9%. Verizon reported net additions to its FiOS TV service totaled 263,000, which is better than the 148,000 net subscriber additions that AT&T; (T 38.58) recently reported.[17]
Analysts on average had expected a profit of 81 cents a share on sales of $20.4 billion, according to Reuters Estimates.[4] Net income probably jumped 7 percent to $2.69 billion, or 82 cents a share, based on the average estimate of seventeen analysts compiled by Bloomberg.[25]
Sysco Corp. (SYY 28.12), a leading international food distributor, announced earlier this morning sales for its third fiscal quarter totaled $9.2 billion, up from $8.6 billion one year ago and in-line with analysts' sales estimates.[30] Beef sales for the quarter slipped to $2.99 billion from last year's $3.00 billion, reflecting a 4.4% price increase and a 4.6% volume decline.[31] Waste Management posted $3.27 billion in sales for the first quarter, an increase of 2.4% from the prior year.[33] General Motors reported $42.7 billion in sales for the quarter, which reflected a 1.6% downturn from the prior year.[27]
Sales climbed more than 12% from the prior year to $6.96 billion, which is largely in-line with the consensus sales forecast. Humana successfully added more than 201,000 members to its commercial business, which continues to encounter intense competition from both regional insurers, national providers, and other managed care companies like WellPoint (WLP 51.07), UnitedHealth (UNH 33.99), and Aetna (AET 43.91).[5]
The Dow component's sales rose 7.7% to $16.19 billion from $15.04 billion a year ago. Another peer, Kimberly-Clark Corp. (KMB)'s first-quarter net profit dropped 2.5%, hurt by charges for strategic cost reductions.[1] Fabric Care and Home Care: Sales rose 10 percent to $5.8 billion while profits increased 12 percent, to $781 million.[7] Beauty: Sales increased 9 percent to $4.7 billion, while earnings declined by 2 percent, to $589 million.[7]
The company reported a 10% rise in fabric care and home care net sales to $5.8 billion, driven by 6% volume growth.[1] The company's health care business generated quarterly net sales of $3.7 billion, up 11% from the prior-year quarter.[1] Baby care and family care net sales were up 8% in the quarter to $3.5 billion.[1]
Sales for Colgate's first fiscal quarter totaled $3.71 billion, reflecting an increase of more than 15% year-over-year.[28] Analysts took a more pessimistic stance and forecast $3.55 billion in first quarter sales.[19] Dairy and food producer Dean Foods (DF 22.52) announced prior to this morning's open its first quarter sales climbed an impressive 17% year-over-year to $3.08 billion, reflecting higher pricing efforts.[20]
Ten Wall Street analysts had a consensus sales estimate of $20.43 billion in the quarter.[1] The deal is fully underwritten and not subject to financing conditions. For its most recent quarter Wrigley's sales climbed nearly 16% year-over-year to $1.45 billion, topping analysts' $1.39 billion sales estimate.[32]
Analysts were expecting similar growth, pegging the consensus sales estimate just above $2.4 billion.[15]
Sales growth was strongest in Latin America, up 19% from the prior year to $864 million.[15] Sales slowed in the radio division, slipping 9% from the prior year to $363 million.[19]
Advertising cost the company $82 million, up 14% from a year earlier. Avon also increased its number of active representatives by 14%, helping to bring in extra sales from abroad.[15] In the quarter, operating margin improved 60-basis points, due to the impact of cost savings projects and synergy benefits from the integration of Gillette, as well as improved overhead costs and volume leverage. These factors more than offset higher commodity costs, the company noted. Among Procter & Gamble's rivals, Johnson & Johnson (JNJ) on April 15 reported a 40% rise in its first-quarter profit on higher sales in its consumer business and in the absence of a charge that was incurred in the year-ago quarter.[1] Procter & Gamble PG beat Wall Street's expectations with its fiscal third-quarter results, as the household products maker said sales growth and cost controls offset higher commodity costs.[3] The maker of Tide laundry detergent and Pampers diapers attributed the increase in earnings to net sales growth, cost control and Gillette synergy benefits.[1] The net sales growth was helped by a 6% increase in volume and a 6% favorable foreign exchange impact, but offset by a 1% negative mix impact.[1] Volume rose 4 percent, helping to illustrate how price increases and exchange rates contributed to sales growth. Expenses are a critical issue for P&G;, which had reduced overhead spending to improve its cost-to-sales ratios.[7]
Chicken sales totaled $2.15 billion, reflecting a 7.2% average price increase and a 1.2% volume decline.[31]
Simplistic-sounding, even a little hokey, his "the Consumer is Boss" mantra for PG employees has worked. Sales, profits and stock price have climbed as the maker of such products as Pampers diapers, Crest toothpaste and Olay skin care has rebounded and grown in the eight years since Lafley was promoted to run a venerable company that was in a skid. In an Associated Press interview, Lafley discussed the consumer philosophy and strategic changes hes made, while remaining cagey about his future plans. [22] The maker of Max Factor makeup and Pantene and Wella hair care products agreed during the quarter to buy Frederic Fekkai & Co. from Catterton Partners to expand into more profitable, faster-growing beauty lines. It was the fifth such purchase in two years. P&G; is taking market share from Unilever, the world's second-largest consumer products maker, in developing economies such as India by stepping up marketing, cutting prices and increasing shelf space for products including Olay skin-care.[25] Shares of P&G; are up almost 48% over the past five years. Those aren't Google Inc. (NASDAQ: GOOG ]] GOOG ) numbers, but they aren't bad either. That's a credit to Lafley, a well-regarded CEO who is credited by Wall Street with refocusing the consumer products giant which was floundering at the time.[34]
"Our products are pretty inelastic.'' The company is seeing softness in sales of some high-end skin care products and fragrances, he said. Store-branded products are not increasing at P&G;'s expense, he said. P&G; said it's increasing market share in about 60 percent of products sold in the U.S., including Gain and Tide laundry detergents.[26] Fourth- quarter sales will increase 8 to 10 percent, resulting in profit of 76 to 78 cents a share, P&G; said.[26] Analysts surveyed by Bloomberg estimated full-year profit of $3.49 a share. Profit in 2009 will be $3.80 to $3.85 a share, including any effects from the sale or spinoff of its Folgers coffee business, Daley said.[26]
The company expects profits will range from $1.15 to $1.20 per share.[5] Management offered an open-ended outlook for the full year, seeing profits of at least $1.20 per share.[20] Management issued in-line guidance for 2008, seeing profits between $2.95 and $3.03 per share.[23]
The results were an impressive $0.59 better than the $2.00 per share that analysts came to expect.[18] Burlington earned $1.30 per share, well-ahead of the $1.22 per share that analysts forecast.[35]
On average, analysts called for profits of just one penny per share for the most recent quarter. Shares of TSN have managed to climb nearly 20% since hitting their 52-week low in late January.[31]
Waste Management earned $0.43 per diluted share for the same quarter one year ago.[33] Integrated waste service provider Waste Management (WMI 35.37) generated $0.47 per diluted share in its most recent quarter.[33]
PGs shares were up $2.10, or 3.2 percent to $68 in morning trading on the New York Stock Exchange.[4] P&G; climbed $2.41, or 3.7 percent, to $68.31 at 12:23 p.m. in New York Stock Exchange composite trading, the biggest gain since February 2007. The stock declined 10 percent this year before today.[26]
Shares rose $1.88, or 2.9 percent, to $67.78 in morning trading Wednesday. They have traded between $60.76 and $75.18 in the past year.[9]
For the nine months ended March 31, 2008, the company's net earnings rose 12% to $9.06 billion from $8.07 billion last year.[1] Nine-month revenue rose to $62.2 billion from $57.2 billion a year ago. The company cited continued double-digit volume growth in developing markets and strong growth among key brands such as Pampers diapers, Gillette Fusion razors and Head & Shoulders shampoo.[9] Procter & Gamble ( PG, Fortune 500 ) revenue rose 9% to $20.46 billion, from $18.69 billion last year.[36]
The company, however, generated $4.26 billion in revenue, up nearly 17% from the prior year.[35] Revenues totaled $20.46 billion during the company's third fiscal quarter, matching analysts' expectations.[14] Freight and rail transportation company Burlington Northern Santa Fe (BNI 101.12) announced solid results for its first fiscal quarter this morning. Both revenues and earnings showed strong growth, topping analysts' expectations.[35]
Notably, management stated it is targeting earnings per share growth of 20% or greater going forward. This is supported by strong growth in both purchase volume and transactions.[16] Wall Streets current consensus estimate is for earnings of $3.49 a share in 2008.[11] Analysts surveyed by Thomson Reuters, on average, projected earnings of 81 cents a share for the quarter.[10] Analysts polled by Thomson Financial had expected earnings of 81 cents a share.[3]
The company anticipates earnings of 76 to 78 cents a share in the June period.[11] In January, the consumer-products giant said it expected earnings of 79 cents to 81 cents a share, below.[12]
Historically, shares traded at 19.5x trailing earnings during the last three years, and 20.2x trailing earnings during the last five years. The stock is up 8% this year.[33] AT&T; recently announced that it added a net 491,000 broadband connections, though wireless additions for the quarter were not immediately available. Shares of Verizon have slipped nearly 15% year-to-date, while AT&T;'s stock has declined a less severe 7% this year.[17] Operating margins gained 80 basis points, advancing to 6.4%. Shares of Express Scripts are down slightly year-to-date, as are those of primary competitor Medco Health Solutions (MHS 49.12). Both companies saw their stock prices slip during the first quarter, but their share prices have since rallied to reclaim the majority of their losses.[23]
Cincinnati-based consumer product manufacturer posts profit increase of 8% in first quarter on cost control, price increases.[36] Profits will likely face continued pressure from rising commodity costs as milk prices are held in check by competing labels. Strong opportunities continue to exist for organic products in this field, and so, we would like to see Dean Foods exercise its larger scale and make a more concerted effort to meet consumers' desire for these wholesome products.[20]
Procter & Gamble says first-quarter profit rose as cost control and price increases helped offset higher commodity costs.[24] April 30 (Bloomberg) -- Procter & Gamble Co., the world's largest consumer-products company, said third-quarter profit rose 7.9 percent, matching analysts' estimates, on increased sales overseas and higher prices.[26]
U.S. consumers have been hit by soaring prices for food and gasoline, among other economic woes. PG said in February it had not seen signs consumers are leaving its brands -- which also include Tide laundry detergent, Gillette razors and Crest toothpaste -- for lower-priced products. Net sales in its beauty segment rose 9 percent during the period, while its health and well-being division saw an 11 percent sales increase.[4] A favorable foreign exchange added 5 percent to net sales, for instance, and price increases added 1 percent.[7]
A few price increases and some brand building helped Kellogg (K 51.98) improve its sales 10% from the prior year, 5% represented organic growth.[13]
The answer is "yes." The company even boosted its 2008 guidance to $3.46 to $3.50, helped by strong sales overseas. That compares with prior guidance of $3.46 to $3.50.[34] PG has opened up to recruit ideas and innovation from outside the company in what Lafley calls "connect and develop." The company has built its core brands, now at 23 with $1 billion (0.64 billion) or more in annual sales, while jettisoning slower-growing ones such as Comet household cleanser and Sure deodorant. PG has also rapidly built up business in emerging markets such as China, India and Russia. The company extended its brand lineup in a big way with the 2005 acquisition of Gillette Co. and its shavers.[22] Cardholders rely on merchants to accept Visa for an electronic means of payment. Though merchants are charged an interchange fee by Visa, they are unlikely to leave Visa's network and risk turning away sales to simply avoid transaction fees. These high switching costs give Visa a strong competitive edge. Such strong positioning may also backfire as lawsuits challenge Visa for anticompetitive practices. If regulators step in, Visa could see its revenues slashed. As part of its IPO, Visa raised $3 billion to hedge against legal liabilities.[16] In terms of revenues, analysts were calling for sales of $4.09 billion.[35] Revenues were slightly ahead of the consensus estimate, which pegged sales at $3.20 billion.[33]
Analysts surveyed by Thomson Financial predicted profit of 81 cents on revenue of $20.4 billion.[7] The Cincinnati-based company was expected to earn 81 cents on revenue of $21.44 billion, according to Thomson Financial.[34] Revenue advanced 9.5 percent to $20.5 billion, helped by the dollar's decline, the Cincinnati-based company said today in a statement.[26] Television remains the company's primary operating segment, where revenues climbed 1% year-over-year to $2.60 billion.[19]
MasterCard's first quarter revenues climbed 29% year-over-year to $1.18 billion.[18] Overall, Kellogg's top line climbed to $3.26 billion for the first quarter.[13]
The housing market is in a tailspin, commodities are soaring and gas prices are nearing $4 a gallon. It is against this backdrop that Procter & Gamble Co. (NYSE: PG ) reported better-than-expected first quarter results.[34] Kellogg's first quarter free cash flow decreased from $289 million last year to $181 million most recently.[13] Volume slipped roughly 1% in the dairy segment, but increased 17% in the firm's WhiteWave-Morningstar unit. The former contributed nearly $131 million in operating income, down 15% from the prior year, while the latter accounted for $45 million in operating profits, up just 1% from last year.[20] The dramatic drop from the prior year resulted from higher interest expenses and lower operating results. Dean Foods saw its interest expense climb to $83.8 million from last year's $52.2 million, after the company took on debt to pay a special cash dividend to shareholders one year ago.[20]
During the quarter, total payment volume grew 19% over the prior year to $681 billion.[16]
Oil futures surged to a record $119.93 on April 28, while corn reached a high of $6.24 a bushel yesterday. P&G; sees raw material costs rising about $1.4 billion this year and $2 billion in 2009, Daley said on a conference call.[26] After raising prices five times, including a 7 percent increase on March 3, P&G; lowered the cost of Folgers, the top- selling U.S. coffee brand. That was the first reduction in two years as bean prices began to decline.[26] PG also lifted its full-year outlook, and its shares rose 3.2 percent. Like its rivals, PG has faced soaring costs for items like oil, the resin used in packaging, and other raw materials. In order to combat this, PG has said it will broadly increase prices across most of its categories.[4] "Material and energy costs for next year are even more challenging," Chief Financial Officer Clayton Daley said on a conference call. "Competitors, including private-label manufacturers and retailers, have been generally increasing prices as well," Daley said, adding that he doesnt expect the price increases to damage PGs leading position in the market.[4] More specifically, the company believes it can balance higher input costs with savings initiatives and pricing efforts. Colgate expects these efforts will improve the company's gross margin substantially in 2009, even if oil and commodity prices increase moderately above their current levels.[28]
The company expects operating margins will increase by 20 basis points or more for the year.[14]
Sales of existing products will increase 4 percent to 6 percent next year, the company said.[26] Growth in U.S. markets has slowed, Daley said, although sales are still increasing as much as 4 percent. The U.S. economic slowdown doesn't affect P&G; as much as other companies because of the types of products it sells, he said. "People are still going to wash their clothes and shampoo their hair,'' he said.[26] U.S. consumers have been hit by soaring prices for food and gasoline, among other economic woes. P&G; said in February that it had not seen signs that consumers are leaving its brands -- which also include Tide laundry detergent, Gillette razors and Crest toothpaste -- for lower-priced products. "P&G; has seen limited trade down to private label in its categories despite the U.S. economic slowdown," SunTrust Robinson Humphrey analyst William Chappell wrote in a research note. "It is seeing a consumer shift to club, dollar and mass channels, but its overall growth rate in the U.S. is relatively unchanged in the past six months," wrote Chappell, who has a "neutral" rating on the stock.[8]
Products including Febreeze, Fusion, Gain and Head & Shoulders "delivered at least high-single digit volume growth." That's impressive, but the question on everyone's mind is can P&G; keep it up. Will people start avoiding its products such as Tide for cheaper alternatives? One of the laws of the shopping universe is that somewhere in some store Tide is on sale.[34] Each of P&G;'s business segments delivered year-on-year volume and net sales growth.[7] For the fiscal fourth quarter, P&G; said it sees organic sales growth of between 4% and 6%. It sees total sales growth of 8% to 10% for the quarter.[11] Kellogg's international division reported first quarter sales growth of 16%, helped by a weaker dollar.[13] "There was rising investor concern heading into the quarter about the potential for slowing organic sales growth, particularly in light of weakness in more discretionary categories," Goldman Sachs analyst Andrew Sawyer wrote in a research note.[4]
Organic volume and sales, which excluded the impacts of acquisitions, divestitures and foreign exchange, rose 5% in the quarter, with five of the company's six segments delivering mid-single digit or higher organic volume growth.[1] Foreign exchange helped boost sales, while earnings were bolstered by cost-cutting measures and synergy benefits from its acquisition of Gillette. The company also raised its guidance for the full year.[2] The company's full-year net sales are expected to grow about 9% from fiscal year 2007. The company also projects that organic volume and organic sales, both will grow approximately 5% in fiscal 2008.[1] Despite Procter & Gamble's mammoth size, sales still grew more than 9% from last year. P&G; reported sales volume increased in each of its segments, lifting overall volume 4%.[14]
Bounty paper towels, Crest tooth paste and Tide detergent are just some of the company's brands. In March, Cincinnati-based Procter & Gamble said it will acquire New York-based Frederic Fekkai & Co., which includes high-end hair care products and salons, part of a P&G; focus on building its high-margin, fast-growing beauty business.[29] The company developed a Downy single-rinse fabric softener, Lafley says, after seeing that water availability and repeated rinsing were big issues for lower-income women in Mexico. Lafley said he still visits homes, particularly in developing countries, and goes on shopping trips to observe. He also monitors consumer complaints. "Frankly, theyre little jewels for us. What the consumers complaining about gives us opportunity to learn what we can do better," he said. Scott Anthony, president of Innosight LLC, a consulting company, said Lafleys "Consumer is Boss" and other shorthand such as "Who is your Who (target consumer)?" drive the global company because its clear they arent just buzz phrases for him. "You go inside Procter Gamble and its not just a slogan, its part of the fabric of the organization," Anthony said. "The depth of conviction allows him to lead in a powerful way." Lafley, whose recently published first book, "The Game-Changer," focuses on the role of innovation in business, leads the only consumer products company in BusinessWeek magazines survey of the top 25 most innovative companies out this month; its ranked eighth.[22] Procter & Gamble's extremely broad and enviable product portfolio of well-branded noncyclical consumer products helps insulate it from any single undermining event.[14]
Like other consumer products makers, P&G; has faced soaring costs for items like oil, the resin used in packaging, and other raw materials.[8] The company already boasts an impressive line-up of well-branded, noncyclical consumer products, but will need to continue penetrating emerging markets with new and wider margin goods.[28]
The company still expects free cash flow to hit $1 billion at the low end. Kellogg is increasing its quarterly dividend by 10% in the third quarter. [13] Snacks, Coffee and Pet Care: Sales increased 11 percent to $1.2 billion.[7] Sales increased by 9 percent, to $20.5 billion, from $18.7 billion. Both measures beat Wall Street expectations.[7]
Avon's top line grew roughly 14% year-over-year, hitting nearly $2.5 billion in total sales.[15]
Sales in China climbed 19% year-over-year to $88 million and still represent the smallest region by revenue.[15] The decline was offset, however, by a 7% annual increase in outdoor revenues, totaling $497 million during the quarter.[19]
Net earnings fell 9% to $105 million due to the receipt of a Hurricane Katrina insurance payment in the base period and higher commodity costs.[1] Fabric care and home care's net earnings increased 12% year-over-year to $781 million.[1]
PG closed Tuesday's trade at $65.90, down $0.31, on a volume of 16.57 million shares. [1] The offer to buy the shares came at a premium to last Friday's closing price. Kerkorian's Tracinda will pay $8.50 for each share, which is $1, or 13%, more than where they finished last week.[37]
STOCK PERFORMANCE: Shares fell about 5 percent during the first three months of the year.[29] Neither company is subject to bad debt or late payments, like American Express (AXP 47.89). MasterCard's stock has continued to perform well; its shares have virtually doubled in value during the past year.[18]
After reporting a profit surprise last week shares of Ford Motor Company (F 8.21, +0.71) made their largest single-session climb in years.[37] Consumer goods rival Colgate-Palmolive CL shares were falling after the company saw profits sag on restructuring charges Wednesday morning.[3]
Seventeen analysts surveyed by Bloomberg estimated average third-quarter profit of 82 cents a share.[26] The current average analysts view is for a profit of 78 cents a share in the period.[11]
Cosmetics maker Avon Products AVP also saw shares dip Tuesday, after missing profit expectations.[3]
P&G; plans to shed the Folgers unit to focus on faster- growing products. A decision on how that will be structured is expected this quarter, Daley said. The funds from the divestiture will result in a one-time earnings gain in 2009, he said.[26] MasterCard (MA 242.50) announced some impressive results this morning. The company has now topped earnings estimates for eight consecutive quarters, or every quarter since its initial public offering.[18] Dan Kiley, president of Cincinnati-area Retirement Capital Advisors, is upbeat about PG as a long-term investment. He vividly remembers the dismal 2000 period when Lafley took over as stock plummeted some 50 percent in six months. The company had been trying to make acquisitions, rattled investors used to steady results by warning it would miss earnings targets, and, Lafley writes in his book, was stretching too far, too fast.[22] The stock's expected earnings to growth ratio is nearly 4.7x. Given the macro headwinds facing Tyson, its rich multiple, and limited growth, current investors should consider taking some gains.[31] The stock currently trades at a rich 31.3x trailing 12-month earnings and offers little growth.[31]
Merck's shares currently trade at 11.4x trailing 12-month earnings and 11.3x next year's expected earnings. [21] During the last few years shares have traded closer to 15.0x trailing earnings.[21]
Subsidies to insurers providing coverage to seniors through the Medicare Advantage program will increase next year, a positive development for providers participating in the program. Rising benefit costs and claims volume recently caused management to cut its earnings outlook, thus alarming investors.[5] Rising input costs, however, ate into Kellogg's advance sales, but earnings still topped analysts' expectations.[13] Merck maintains a strong name and is rich in resources; research and development costs amounted to 20% of sales last year, more than Schering-Plough, Eli Lilly (LLY 48.17, -1.19), or Bristol Myers Squibb (BMY 21.85, -0.31).[21] Excluding favorable currency terms, sales still grew 6% compared with last year.[15]
Developing markets, including China, Eastern Europe, India and Latin America, accounted for about 27 percent of P&G;'s earnings last year, according to data compiled by Bloomberg.[25] Earnings were helped by widening margins. Express Scripts saw its gross margin tack on 90 basis points, improving to 10.2% from the prior year.[23] Excluding restructuring charges, gross margins showed a decline of 10 basis points from the prior year to 57.3%.[28]
Colgate is on the right track. It spent 16% more on advertising this quarter and saw a 5% increase in worldwide unit volume, when compared with last year. [28] WHATS AHEAD: Analysts expect P&G; not to fully benefit from price increases until the fiscal fourth quarter.[29] NEW YORK -- Consumer-products maker Procter & Gamble Co. reports earnings for the fiscal third quarter on Wednesday.[29] Procter & Gamble Co. reported a 7.9% rise in fiscal third-quarter net income and raised the low end of its fiscal-year forecast, while smaller peer Colgate-Palmolive Co. had a 4.1% decline in the first quarter on year-earlier gains.[12]
BP and Shell beat forecasts for first quarter earnings, partly due to sky-high oil prices.[4]
Shares of General Motors (GM 21.20) are trading higher in Wednesday's premarket activity. The automaker is attracting some positive attention after posting better-than-feared first quarter results this morning.[27]
"P&G; is adeptly navigating the tough environment, taking pricing to offset cost inflation and leaning heavily on developing markets,'' William Schmitz, an analyst at Deutsche Bank Securities Inc, said today in a research note. He recommends investors hold the shares.[26] P&G; is raising prices and cutting expenses more quickly than in past years to counter higher costs for the oil, resins, phosphates and corn it uses to make everything from plastic bottles to Iams pet food.[25] NEW YORK (Reuters) - Procter & Gamble Co (PG.N: Quote, Profile, Research ) on Wednesday posted higher quarterly profit as cost controls helped offset soaring prices for oil and other commodities.[8] Chief Executive Officer A.G. Lafley also raised prices on Folgers coffee, Downy fabric softener and other products in response to higher commodity costs.[26] There is widespread fear that rising material and commodity costs will detract from margins and undermine earnings going forward. Management remains confident in its ability to maintain, or possibly improve, its record-level margins.[28]
Humana reported that benefit expenses relative to revenues decreased 10 basis points year-over-year to 86.7%. Humana's commercial segment saw a 260 basis point decline in its benefit expense ratio. Despite the recent reduction in expected earnings, management issued upside guidance for its second quarter.[5] The consensus revenue estimate called for a top line of $40.8 billion.[27] P&G;, a component of the Dow Jones Industrial Average, said operating cash flow reached $4.3 billion in the period.[11] Worldwide purchase volume climbed 15% to $453 billion under constant currency terms.[18] Billionaire investor Warren Buffett is providing some financial backing for candy maker Mars' $23 billion purc.[4]
North America is the second largest and saw sales slip 7% year-over-year to $593 million.[15] Profits declined 9 percent, to $105 million, because the year-ago period reflected a Hurricane Katrina insurance payment.[7]
Currency changes probably boosted P&G;'s sales by 5 percent in the quarter, Dibadj said.[25] "The big question is whether PG can continue to grow sales and protect shares in a challenging economy," Gere wrote.[29] The very next session profit-taking efforts and a series of downgrades from a handful of key investment banks pushed shares lower to negate the advance. Shares of Ford are rebounding again on Monday after activist investor Kirk Kerkorian disclosed plans to increase his stake in the automaker. According to this morning's edition of The Wall Street Journal, Kerkorian's Tracinda Corp. currently owns 100 million shares of Ford, or 4.7%, but plans to add another 20 million shares to his portfolio, increasing his stake to roughly 5.7%.[37] If Continental genuinely has little interest in merging, it may consider joining a new alliance. That would allow it to share passengers with a host of other carriers, thereby granting access to new passengers without selling itself. According to this morning's article, AMR Corp. (AMR 7.52, +0.09), parent of American Airlines, has been trying to tempt Continental to join an alliance with itself and British Airways, though Continental is already in an alliance with Delta and Northwest. Whether bluffing or not, Continental's rebuff has weighed on airline carriers this session. Slowing the merger-wave means delaying the synergies, efficiencies, and potential pricing power industry analysts are pinning their hopes on.[38]
Some analysts expect PG growth to slow as the economic downturn tightens consumer buying.[22] Revenues were helped by increases in agricultural product volume growth, reflecting heightened demand for all things commodities. Except for commercial products, revenues grew at a double-digit clip in each of its product segments.[35] The quarter includes revenues associated with the NFL Super Bowl and revenues related to the NCAA Men's Basketball Tournament. The company is also arranging a self-distribution of its popular CSI franchise, which was previously distributed by a third party.[19]
The stock gained plenty of attention last year when it was disclosed that Warren Buffett took a sizeable stake in the company.[35] The company plans to increase productivity and implement pricing hikes to more than offset the impact of higher materials costs.[14] The near 7% increase in sales was just enough to offset the 6% rise in food costs.[30]
First-quarter adjusted earnings meet estimates. The recent Altria spin-off beat analyst expectations in its first report as an independent entity. [3] Analysts expect the handset maker's first-quarter earnings to be unremarkable, but not terrible.[3]
SOURCES
1. Procter & Gamble Q3 Profit Up 8% On Sales Growth, Cost Control; EPS Beats Estimate; Lifts Low End Of FY08 EPS Outlook - Update [PG] - RTTNews, Today's Top Stories, Global Newswires, ToDay's Top News,Global Business news .
2. P&G; Profit Rises On Increased Sales, Cost Savings [PG] - RTTNews, Today's Top Stories, Global Newswires, ToDay's Top News,Global Business news .
3. P&G; Beats Expectations | Consumer Goods | ACV AVP CL EL JNJ KMB PG - TheStreet.com
4. Procter Gamble posts higher quarterly profit - International Herald Tribune
5. Briefing.com: Humana Tops Reduced Estimates
6. The Associated Press: Cost control, price increases boost P&G; results
7. P&G; shares climb on profit growth - Dayton Business Journal:
8. P&G; profit helped by cost controls | Markets | Hot Stocks | Reuters
9. The Associated Press: Cost controls, emerging market growth boosts P&G; profit
10. Procter & Gamble 3Q Net Rises, Helped By Cost Control
11. Procter & Gamble 3Q eps edges Wall St. view; co. lifts bottom of FY08.. | Latest News | News | Hemscott
12. Free Preview - WSJ.com
13. Briefing.com: Sales Growth Helps Kellogg Beat Earnings
14. Market Report -- Story Stocks (PG): Briefing.com Business News - MSN Money
15. Briefing.com: Avon Ad Money Well-Spent; Revenue Up 14%
16. Briefing.com: Visa Beats Estimates, Aims for 20% Growth
17. Briefing.com: Verizon Growth Meets Forecasts
18. Briefing.com: MasterCard Reports Earnings Blowout
19. Briefing.com: CBS Posts Solid Earnings, Raises Dividend
20. Briefing.com: Dean Foods Q1 Sales Climb 17%
21. Briefing.com: FDA Rejects Merck's Cholesterol Drug
22. Procter Gamble chief discusses consumer strategies - International Herald Tribune
23. Briefing.com: Express Scripts Writes Healthy Report
24. Cost control, price increases boost P&G; results - Forbes.com
25. Bloomberg.com: U.S.
26. Bloomberg.com: Worldwide
27. Briefing.com: GM Sales Top Estimates
28. Briefing.com: Colgate-Palmolive Posts Positive Q1 Report
29. Earnings Preview: Procter & Gamble | Chron.com - Houston Chronicle
30. Briefing.com: Sysco Sales Grow Nearly 7%
31. Briefing.com: Costs Weigh on Tyson Foods
32. Briefing.com: Mars Buys Wrigley
33. Briefing.com: Waste Management Posts Slight Gains
34. Procter & Gamble holds steady as consumer confidence plunges - BloggingStocks
35. Briefing.com: Burlington Northern Profits Keep Rolling
36. Procter & Gamble's first-quarter profit rises - Apr. 30, 2008
37. Briefing.com: Kerkorian to Increase Stake in Ford
38. Briefing.com: Continental Not Ready to Join Meger Frenzy
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