Procter & Gamble: Lowering Projections for 2012

Procter & Gamble Co (NYSE:PG) reported sharply lower net income for its fiscal second quarter and also adjusted lower its projection for earnings for 2012. Net earnings were lower by 49 percent to $1.69 billion (57 cents a share) compared to $3.33 billion ($1.11 a share) from a year ago.

However, the company took a non-cash charge of about 50 cents a share when it adjusted the goodwill in its books account the Appliances and Salon business by $1.5 billion. Adjusted earnings were $1.10 per share compared with a Bloomberg consensus estimate of $1.08 a share from 19 analysts. Sales were 3.7 per cent higher at $22.1 billion.

The company reduced its forecast of earnings per share for full year 2012 from $4.33 to $4.10, citing market share concerns owing to price increases arising from higher commodity costs.

Rival Kimberley Clark Corp (NYSE:KMB) also trimmed full year profitability forecasts this week, citing the difficult economy and foreign currency headwinds due to the strengthening dollar – which is up 6.8 per cent since end-August, as measured by the Dollar Index.

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 2.1 percentage points to 49.7% from the year earlier quarter. Over that time, margins have contracted on average 1.8 percentage points per quarter on a year-over-year basis.

Revenue has risen the past four quarters. Revenue increased 8.9% to $21.92 billion in the first quarter. The figure rose 10.2% in the fourth quarter of the last fiscal year from the year earlier and climbed 5.5% in the third quarter of the last fiscal year from the year-ago quarter.

The company has now seen net income fall in each of the last two quarters. In the first quarter, net income fell 1.9% from the year earlier quarter.

The company beat estimates last quarter after being in line with expectations in the first quarter with net income of $1.03 per share.