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Sluggish developed markets hurt P&G, Colgate

Sluggish developed markets hurt P&G, Colgate
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First Published: Thu, Jan 27 2011. 06 43 PM IST
Updated: Thu, Jan 27 2011. 06 44 PM IST
Chicago: Household products maker Procter & Gamble Co and smaller rival Colgate-Palmolive Co posted lower quarterly net income, hurt by sluggish sales in developed markets like the US.
Household products makers have been using promotional pricing and coupons to woo shoppers who shunned pricier brands during the recession. Now that consumer confidence is rising, the companies hope people will once again covet name-brand items.
Both P&G and Colgate have been bringing out new products, with P&G offering lower-priced versions of goods like Bounty paper towels as well as premium items such as Gillette Fusion ProGlide razors.
Colgate has come out with a variety of new and updated toothpastes.
P&G has seen more volume growth in its new lower-priced products, which has weighed on revenue.
P&G, the maker of Gillette razors and Crest toothpaste, earned $3.33 billion, or $1.11 per share, in the second quarter ended in December, down from $4.66 billion, or $1.49 per share, a year earlier.
Much of the decline stemmed from a gain in the year-ago period from the sale of its pharmaceuticals business.
Excluding unusual items, earnings from continuing operations were $1.13 a share. Analysts’ average forecast was $1.10, according to Thomson Reuters I/B/E/S.
P&G’s sales climbed 2% to $21.3 billion, while the volume of goods sold rose 6%.
P&G shares fell to $64.46 in premarket trading on Thursday, down from Wednesday’s New York Stock Exchange close of $66.11.
Colgate, best known for its namesake toothpaste, earned $624 million, or $1.24 per share, in the fourth quarter, compared with $631 million, or $1.21 per share, a year earlier.
Analysts had expected $1.23 per share.
Net income was hit by higher promotional spending and commodity costs.
Colgate, which competes directly with P&G in areas such as toothpaste and toothbrushes, said sales fell 2.5% to $3.98 billion. Analysts on average forecast $4.06 billion.
Organic sales, which strip out the impact of acquisitions, divestitures and foreign exchange fluctuations, rose 1%.
P&G stood by its fiscal 2011 forecasts, calling for earnings from continuing operations of $3.91 to $4.01 per share and organic sales growth of 4% to 6%.. Analysts on average expect $3.98 per share.
Colgate stood by its forecast for a mid-single-digit percentage rise in earnings per share for 2011.
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First Published: Thu, Jan 27 2011. 06 43 PM IST