P&G Shares Down on Investor Disappointment

Shares in Proctor & Gamble (NYS: PG) are down slightly after the consumer goods giant reported a 49% decline in quarterly profit. Its earnings per share for the quarter came in at $0.57 compared to $1.11 in the same quarter a year ago.

The company attributed the majority of the decline to a $1.5 billion noncash writedown of goodwill related to its appliances and salon professional businesses.

According to the press release: "The impairments were primarily driven by the prolonged deterioration of the macroeconomic environment, the more discretionary nature of the products, and increasing levels of competitive activity. Together, these factors have led to a reduction in expected market size and growth rates for both businesses."

This was particularly the case in P&G's Western Europe market, where roughly half of the appliance and salon professional businesses' sales are generated.

Absent the writedown, which equated to $0.50 per share, earnings per share would have been flat, coming in at $1.10.

The company's results remain mixed beyond this. In terms of sales, both its net and organic sales increased 4% for the quarter relative to a year ago. This sales growth was broad-based, as all six of its business segments grew organic sales for the second consecutive quarter. The top performing unit was its baby care and family care unit, which increased net and organic sales by 6%.

In terms of margin, however, the company suffered setbacks due to higher commodity prices; its core operating margin decreased by 160 basis points.

In a theme that's becoming all too familiar now, P&G reported divergent results in developed markets versus developing markets. In developing markets, sales volume grew at "high-single-digit" rates. In developed markets, alternatively, sales volume experienced a "mid-single-digit" decrease.

Over the quarter, the company repurchased $0.5 billion of its shares and returned $1.5 billion of cash to shareholders as dividends. Its dividend yield stands currently at 3.25%.

P&G downgraded its full-year earnings estimate to $4.00-$4.10 a share, down from its previous estimate of $4.15-$4.33 a share.

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