December 22, 2024

P&G Shares Fall After Forecast Misses Expectations

The world’s largest household products maker also posted fiscal third-quarter profit that topped estimates despite sales that were weaker than both the company and analysts had anticipated.

PG has been trying to reinvigorate itself under Chief Executive Bob McDonald. The company has held or gained market share in more of its businesses in the latest quarters after stiffer competition from rivals like Unilever and Colgate-Palmolive Co.

While products such as Tide Pods have boosted U.S. sales, PG still needs to figure out the formula for getting products such as Pantene shampoo to stand out among competitors, it said. PG plans to promote several brands during the current quarter, including Olay skin care products.

Net sales decreased in the hair care and skin care business in the latest quarter.

“We’ve got a little bit more work to do” in skin care, McDonald told reporters.

In February 2012, McDonald unveiled a $10 billion restructuring plan including thousands of job cuts after PG acknowledged it was not nimble enough, especially in emerging markets.

Shares of PG fell to $79.65 in premarket trading after closing at an all-time high of $82.54 on Tuesday.

“We continue to believe the necessary improvements at PG from both a cost and innovation standpoint will take time, and the stock seems to already reflect further momentum,” said Oppenheimer analyst Joseph Altobelllo, who rates the stock “market perform.”

SALES MISS FORECAST

PG, whose other brands include Pampers diapers and Gillette razors, forecast fourth-quarter core earnings of 69 cents to 77 cents per share, while analysts were looking for 81 cents, according to Thomson Reuters I/B/E/S. PG earned 82 cents per share in the fourth quarter of fiscal 2012.

PG said it earned 99 cents per share on a core basis in the quarter ended in March, topping analysts’ target of 96 cents. Core earnings exclude items such as restructuring charges.

Overall sales rose 2 percent to $20.598 billion while analysts were looking for sales of $20.73 billion. The company had forecast 3 percent to 4 percent in sales growth.

PG’s organic sales, which strip out the impact of divestitures and foreign exchange changes, grew 3 percent – at the low end of its forecast of 3 percent to 4 percent.

The company saw the strongest volume growth in health care at 5 percent, helped by new toothpastes and a stronger cold and flu season.

On a net basis, the company earned $2.57 billion, or 88 cents per share, in the fiscal third quarter ended in March, up from $2.41 billion, or 82 cents per share, a year earlier.

The company had forecast core earnings per share of 90 cents to 96 cents and net earnings of 80 cents to 88 cents.

Last April, Wall Street analysts roasted McDonald on a conference call after PG issued a profit warning and decided to rescind some price increases. The dour performance prompted activist investor Bill Ackman to call for changes last summer when he bought the shares.

Ackman’s Pershing Square had a 1.02 percent stake in PG, or 27.95 million shares, as of December, making it the company’s eighth-largest shareholder, according to Thomson Reuters data.

PG said it now plans to repurchase $6 billion of its stock this year, at the high end of its prior forecast for $5 billion to $6 billion in buybacks. Last June, PG decided to hold off on buybacks, but in August quickly reverted back to its usual plan. The stock is currently trading near all-time highs.

(Reporting by Jessica Wohl; in Chicago; Editing by Jeffrey Benkoe)

Article source: http://www.nytimes.com/reuters/2013/04/24/business/24reuters-procter-results.html?partner=rss&emc=rss

Media Cache: Playing Catch-Up in E-Books

PARIS — When Bertelsmann, the German media giant, boasted of a financial resurgence last week, one of the strongest growth stories came from one of its most traditional businesses: the book publisher Random House.

Random House said sales of digital books had more than tripled last year, lifting overall revenue 6 percent. E-books, Random House said, accounted for 10 percent of U.S. sales.

So much for the good news. Outside the United States, however, the digital book business is still in its infancy.

During a news conference in Berlin, Markus Dohle, chief executive of Random House, predicted that Europe would catch up with the United States in two to five years.

For that to happen, some big problems will have to be solved. Too few e-reading devices have found their way into European consumers’ hands, and too few titles are available to them in digital form.

While booksellers like FNAC in France and Thalia in Germany have introduced e-book readers, the Amazon Kindle is conspicuously absent from much of Europe. The company has introduced an international version of the device, but outside Britain, where Amazon recently opened a Kindle Store, there are virtually no local-language books available for European Kindle users.

Some European publishers have balked at licensing their works for digital sale via Amazon, fearing cannibalization of physical sales, as well as the U.S. giant’s reputation for hardball negotiations over pricing.

Other devices that allow book reading, like the Apple iPad, are more widely distributed in Europe. But few European publishers have licensed their works for sale on Apple’s digital store.

Meanwhile, European legislative and regulatory developments are further clouding the picture.

Last week, the French Senate approved a measure under which publishers could set the retail price of e-books, so that a title would cost the same whether it was sold by, say, Apple or a French-owned e-book store. The proposal would extend into the digital realm a pricing system that governs the sale of ink-on-paper books in France and several other European countries, preventing booksellers from offering discounts.

Publishers say single-price rules support independent booksellers and encourage them to stock a diverse range of titles, rather than filling their shelves with cut-price bestsellers. These systems have deep cultural roots, and regulators have generally tolerated them, despite frowning on price-fixing in other forms.

But there are signs that the European Commission is going to be stricter about the pricing of digital books. Last month, commission officials raided the offices of a number of European publishers, saying they had “reason to believe that the companies concerned may have violated E.U. antitrust rules.”

Publishing executives say the regulators are scrutinizing the so-called agency model of pricing, under which publishers set the retail prices of e-books, with the online retailers taking a commission.

Amazon prefers to buy books from publishers on a wholesale basis and then set its own retail prices. But it reluctantly adopted the agency model in the United States recently.

If European regulators do not like the agency model, it is hard to imagine that they could live with the proposed French law. In addition to allowing publishers to set retail prices, it would apply to any digital retailer operating in France, even Web sites based elsewhere in Europe. That, according to some publishing executives, sounds like a violation of E.U. e-commerce rules, which are intended to encourage cross-border business.

Working out these seeming contradictions could take years. In the meantime, the European e-book market may continue to lag behind.

If European books remain unavailable via legitimate digital outlets, the threat of piracy will grow. Publishers, politicians and regulators need only look at the music industry to see what that means.

Article source: http://feeds.nytimes.com/click.phdo?i=03d23ff772656fe67f5bc2a4b1a7c567