Procter & Gamble (PG) reported a bruising 31% drop in quarterly net income Tuesday, as the consumer-products giant became the latest international firm to report sales were hurt by weaker foreign currencies versus the U.S. dollar. Here are the most important points from the fiscal second quarter earnings report.
What you need to know: Net income slid sharply to $2.4 billion from $3.4 billion a year ago for the period ended Dec. 31, with results not only hurt by the foreign-currency woes, but also charges tied to the battery business P&G is casting aside. Core earnings, which exclude discontinued operations and foreign exchange, still slid 8% to $1.06 per share.
“Virtually every currency in the world devalued versus the U.S. dollar, with the Russian Ruble leading the way,” said President and CEO A.G. Lafley. He added that the outlook for the year would remain a huge challenge, with weaker foreign currencies reducing full-year sales by 5% and hurting net income by 12%, or at least $1.4 billion after tax.
The big number: Net sales slid 4% to $20.2 billion, worse than the $20.6 billion projected by analysts. Organic sales, which exclude the currency woes and discontinued operations and other items, rose 2%, with the maker of Pampers diapers and Tide detergent reporting growth in four of five reporting segments. The baby, feminine and family care segment was the best performer, with organic sales up 4%, while sales only slid for the beauty, hair and personal care business.
What you might have missed: P&G previously announced it would sell its Duracell battery business to Warren Buffett’s Berkshire Hathaway (BRKA), and those results were presented as discontinued operations in P&G’s latest results. That loss resulted in a non-cash charge of $740 million to reflect an impairment charge in the battery business.
But P&G maintained its organic sales and core earnings targets for the fiscal year. Growth in sales is projected to be low, as P&G aims for a corporate makeover of sorts. The company in August unveiled plans to shed up to 100 brands, hoping to focus on 70 to 80 brands that are responsible for a vast majority of sales and profit.
