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India, China sales boost P&G net 8%

India, China sales boost P&G net 8%
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First Published: Wed, Apr 30 2008. 10 34 PM IST
Updated: Wed, Apr 30 2008. 10 34 PM IST
Cleveland: The world’s largest consumer goods maker, Procter and Gamble Co. (P&G), said third-quarter profit rose 7.9%, matching analysts’ estimates, on increased sales overseas and higher prices.
Annual profit will be $3.48- 3.50 (about Rs141) a share, up from a projection of at least $3.46, P&G said on Wednesday, sending the shares higher in early New York trading.
Consumers in China, India and Latin America bought more shampoo and make-up as their standards of living improved. Those sales helped overcome a drop in US demand, where customers worried about job losses and higher energy expenses slowed spending.
Chief executive officer A.G. Lafley also raised prices on Folgers coffee, Downy fabric softener and other productsin response to higher commodity costs.
“We believe that Procter and Gamble is well positioned for long-term outperformance,” said Ali Dibadj, a New York-based analyst with Sanford C. Bernstein and Co., in a 25 April report.
Net income climbed to $2.71 billion, or 82 cents a share, from $2.51 billion, or 74 cents, a year earlier.
Revenue advanced 9.5% to $20.5 billion, helped by the dollar’s decline, the Cincinnati-based company said in a statement on Wednesday.
Seventeen analysts surveyed by Bloomberg estimated average profit of 82 cents a share. Thirteen projected sales of $20.4 billion.
P&G shares climbed $2.90 each, or 4.4%, to $68.80 at 7.47am in trading before the New York Stock Exchange opened.
The stock declined 10% this year before Wednesday.
Full-year sales will increase about 9%, the company said. Fourth-quarter sales will increase 8-10% on that basis, resulting in a profit of 76-78 cents a share, P&G said.
Analysts had estimated full-year profit of $3.49 a share.
The company is raising prices and cutting expenses in response to higher costs for the oil, resins, phosphates and grains it uses to make everything from plastic bottles to Iams pet food.
Oil futures surged to a record $119.93 on 28 April, while corn reached a high of $6.24 a bushel on Tuesday.
Lafley is divesting underperforming businesses and adding health and beauty products to boost P&G’s 10% share of that $350 billion market, said Bill Pecoriello, a New York-based analyst with Morgan Stanley, in a 24 April report. He recommends investors buy the shares.
The maker of Max Factor make-up and Pantene and Wella haircare products agreed in March to buy Frederic Fekkai and Co. from Catterton Partners.
P&G also plans to shed the Folgers unit to focus on faster growing products.
After raising prices five times, including a 7% increase on 3 March, the companylowered the cost of Folgers,the top-selling US coffee brand.
That was the first reduction in two years as bean prices began to decline. Bloomberg
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First Published: Wed, Apr 30 2008. 10 34 PM IST