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.
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.
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.
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.