NEW YORK – Procter & Gamble Co. (PG) on Wednesday said quarterly profit rose 14 percent, boosted by demand for products like Head & Shoulders shampoo and Olay beauty products, and a gain from the recent sale of its juice business.
The maker of Crest toothpaste, Tide laundry detergent and a host of other products also stood by its outlook for the fiscal year despite the increasing costs that have plagued the industry.
Chief Financial Officer Clayt Daley said in a conference call that P&G is being prudent by maintaining — instead of raising — its outlook to ensure it can face whatever comes in the current fiscal year.
Higher raw material costs, price competition and other factors have led rivals such as Kimberly-Clark Corp. (KMB), Colgate-Palmolive Co. (CL) and Unilever NV to issue bleak forecasts in recent weeks. But analysts have said P&G's size and scale could help it weather the storm.
Earnings rose to $2 billion, or 73 cents a share, in the first quarter ended in September, from $1.76 billion, or 63 cents a share, a year earlier. The results exceeded the analysts' average estimate by 1 cent a share, according to Reuters Estimates.
P&G sold its slow-growing Sunny Delight (search) and Punica juice brands to private equity firm J.W. Childs Associates (search) over the summer. That transaction added 2 cents to earnings per share, as expected, P&G said.
Shares of P&G closed at $53.21 on Tuesday. They were virtually unchanged during the quarter, while the Standard & Poor's Household Products Index (search) fell about 4 percent, but have slipped slightly so far this month.
"We believe that recent weakness in the stock was driven by concerns that P&G may reduce its outlook for the December quarter due to an environment of aggressive competitive spending, and today's press release should allay some of those fears," said Banc of America Securities analyst William Steele, who has a "neutral" rating on the stock.
P&G said it was comfortable with Wall Street earnings estimates for the current quarter and the year. Analysts on average expect a profit of 72 cents a share this quarter and $2.59 this fiscal year.
The Cincinnati company, whose other products include Pantene hair care products and Folgers coffee, said net sales rose 13 percent, to $13.74 billion, above analysts' mean target of $13.57 billion.
Sales across all regions grew at or above P&G's long-term targets, it said.
Daley said the company would continue to take price increases where it can, as justified. It is raising detergent prices in countries, including Mexico.
Excluding the effect of acquisitions, divestitures and foreign exchange, sales rose 6 percent. The weak U.S. dollar makes overseas sales worth more when translated into dollars on the income statement.
Volume, a closely watched measure for packaged-goods makers, rose 12 percent — or 8 percent excluding acquisitions and divestitures.