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P&G's Modest Growth Has Investors Waiting For Clearer Comeback

By Publications Checkout
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P&G's Modest Growth Has Investors Waiting For Clearer Comeback

Procter & Gamble delivered a message to activist investor and freshly minted board member Nelson Peltz: Things aren’t that bad.

The company reported second-quarter profit that topped analysts’ estimates, providing evidence that its turnaround is progressing.

But Peltz and like-minded investors may need more convincing. They sent the stock down as much as 1.8% in the wake of the results, a sign that the drumbeat for more radical changes will continue.

Sales at the world’s largest consumer-products company were essentially in line with Wall Street estimates, and product categories like razors and baby care remain in a slump.

The results follow a drawn-out proxy battle last year with Peltz, who called for the addition of new brands and a drastically simplified corporate structure. The billionaire was added to the board in December.

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Both sides have agreed on the need to recapture consumers who have been lured away by upstart and private-label brands.

P&G, the maker of Tide laundry detergent Gillette razors, posted an earnings gain of 10% to $1.19 a share, excluding some items. That was well ahead of the $1.14 projected by Wall Street.

But organic revenue - stripping out currency effects and other factors - grew more modestly, at 2%. The company reported revenue of $17.4 billion, compared with a $17.39 billion average prediction.

Beauty Gains

The once-ailing beauty division saw the biggest bounce, with a 9% organic sales gain - helped by new Olay skin-care products and the luxury-priced SK-II brand. Premium-priced items such as new Oral-B toothbrushes also contributed to a 4% gain in the health-care category.

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Sales in grooming, on the other hand, where the Gillette brand has been hit by cheaper startups, fell 3%.

P&G raised the top of its annual forecast range for core earnings by a percentage point, aiming for a 5% to 8% gain. That was up from 5% to 7% earlier.

News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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