Consumer products giant Procter & Gamble lowered its earnings guidance for the current quarter as well as for fiscal year 2013, citing slower growth in China and tough markets in Europe and the U.S. The guidance cut is the second time in three months that P&G has lowered its outlook.
CEO Bob McDonald also provided details on a program to refocus the group on more profitable businesses, reiterating the substantial cost-saving program. P&G targets cost savings of $10 billion by 2016, with around 5,700 non-manufacturing job cuts by the end of the 2013 fiscal year.
For its April-to-June quarter, P&G sees EPS of $0.75-0.79 vs. prior range of $0.79-0.85 and the consensus of $0.82. Organic sales growth is now expected to be 2-3%, compared with a previous expectation of a growth of 4-5%. Net sales for the quarter are expected to be down 1-2% as foreign exchange is expected to reduce them by 4%.
For fiscal 2013, P&G anticipates adjusted earnings would be flat to up by a mid-single-digit percentage. Stripping out foreign exchange, core earnings per share would show growth of a mid-to-high single-digit percentage. The reduced forecasts illustrate the difficulties faced by consumer-products makers as rising unemployment in Europe and North America restricts spending.
Procter & Gamble (PG : NYSE : US$60.39), Net Change: -1.82, % Change: -2.93%, Volume: 38,698,083