Procter & Gamble's pg fourth-quarter profit fell 18%, and the consumer products maker said Wednesday it expects more declines as households around the globe keep tight reins on spending in the recession.
P&G said Wednesday that slow sales and sluggish earnings will continue in the short term before starting to rebound late in the year, and it forecast lower profit and falling revenue again for the current quarter. P&G officials said they are cutting prices in some markets and adding to their lower-price products.
The maker of Pampers diapers, Tide detergent and Gillette shavers has been hurt by consumers buying less and trading down to cheaper brands.
P&G said sales fell across its broad portfolio, but particularly in discretionary areas such as Braun electric shavers, Oral-B power toothbrushes, Duracell batteries, Pringles snacks and its line of fine fragrances.
The company had raised prices on popular brands over the last two years to try to offset higher commodity costs and foreign exchange losses, but acknowledged Wednesday that price gaps with store brands and other alternatives are hurting sales. They told analysts in a conference call they are making targeted price cuts, but didn't give specifics, and are adding lower-tier products.
Consumers are also trading down within P&G brands, buying more of the lower-price "Basic" versions of Bounty paper towels and Charmin toilet paper and its Gain laundry detergent. P&G is testing a basic version of its No. 1 laundry brand, Tide.
Procter & Gamble reported earnings of nearly $2.5 billion, or 80 cents a share, in the three months ended June 30. That's down from $3 billion, or 92 cents a share, a year ago.
Analysts expected earnings per share of 79 cents.
Revenue fell 11%, to $18.7 billion, as sales fell across the company's broad portfolio. Analysts expected $19.4 billion.
For the first quarter that began July 1, P&G expects earnings per share in the range of 95 cents to $1, down from $1.03 a year ago. Analysts surveyed by Thomson Reuters expect $1 a share.
P&G expects net sales, which also are being hurt by foreign exchange impacts of a stronger U.S. dollar, to be down 7% to 10% for the quarter.
For the full year, P&G stuck with earlier guidance of $3.65 to $3.80 a share with organic sales growth — or sales not related to acquisitions and other such changes — of 1% to 3%. Analysts expect $3.76 a share on revenues of $80.4 billion.
The quarter ended A.G. Lafley's nine-year run as CEO. Bob McDonald took over July 1, while Lafley stays as chairman.
"In fiscal 2009 and particularly in the fourth quarter, P&G faced one of the most difficult macroeconomic environments in decades," Lafley said in a statement, adding that P&G stayed focused on cost discipline and investments for long-term growth.
For its fiscal year, P&G reported profit rose 11%, to $13.4 billion, with a boost from the sale of its Folgers coffee business. Earnings per share were $4.26, with the sale adding 68 cents, over the prior year's $3.64.
Sales fell 3%, to $79 billion.