Procter & Gamble Earnings Beat Estimates

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PG earningsProcter & Gamble (PG), seller of Tide laundry detergent, Gillette shaving products and Pringles chips, reported earnings declined 7% to $3.08 billion in the fiscal first quarter. Earnings from continuing operations, however, rose 2%, with higher volume offsetting lower margins due to pricing and product mix.

"Our first quarter was a good start to the fiscal year. We maintained our top-line momentum and delivered profitable market share growth," said Chairman, President and CEO Bob McDonald.

The consumer products giant reported net earnings from continuing operations of $3.08 billion, compared to $3.03 billion in the same quarter last year. Net earnings per share from continuing operations grew 5% to $1.02 per share from 97 cents per share, beating analysts' estimates of $1.00 per share.

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Net sales increased 2% to $20.12 billion from $19.81 billion last year, but below Wall Street expectations of $20.25 billion. Growth was driven by an 8% broad-based volume growth across all major regions and five of six business segments. Also, market share increased in all geographic regions versus the prior year, and was equal or higher in 13 of the top 17 countries and for 17 of P&G's 23 billion-dollar brands. Organic sales, which exclude the impact of acquisitions, divestitures and foreign exchange, grew 4%.

But lower prices reduced net sales by 1%, while geographic and product mix reduced net sales by 2%. Unfavorable foreign exchange negatively impacted net sales growth by 3%. Operating margin declined 10 basis points for the first fiscal quarter.

Looking ahead, the company expects net sales to increase 3% to 5% in fiscal 2011, with organic sales growing 4% to 6%. Net earnings per share from continuing operations are expected to be in the range of $3.91 to $4.01, up 11% to 14%.

For the second fiscal quarter, P&G expects net sales growth of 2% to 4%, with organic sales growth of 3% to 5%, reflecting continued, strong volume momentum, partially offset by mix and pricing. Net earnings per share from continuing operations are expected to be in the range of $1.05 to $1.11. Analysts are expecting earnings of $1.11 per share on $21.27 billion in revenues.
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