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P&G posts 4Q loss
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August 7, 2001: 2:25 p.m. ET
First quarterly loss in 8 years reflects restructuring; company warns on 2002
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NEW YORK (CNNfn) - Procter & Gamble posted its first quarterly loss in eight years Tuesday reflecting a $1.16 billion restructuring charge, yet managed to slip past wall Street's fiscal fourth-quarter estimates by a penny thanks to managed costs.
The nation's biggest consumer products maker also warned that fiscal 2002 earnings are tracking below its own forecasts, a reflection of fierce price competition and a strong dollar.
For the quarter ended June 30, P&G earned $837 million, or 60 cents a share, before special items. That was up from $777 million, or 55 cents a share, a year earlier. Analysts on average anticipated a profit of 59 cents a share, according to earnings tracker First Call.
Including $1.16 billion in restructuring charges, the maker of Tide laundry detergent, Pampers diapers and Crest toothpaste posted a net loss of $320 million, or 23 cents a share, compared with profit of $516 million, or 37 cents a share a year earlier. The net loss is the company's first in eight years.
Revenue fell 1 percent to $9.58 billion from $9.66 billion.
P&G's (PG: down $0.24 to $70.51, Research, Estimates) shares slid 30 cents in Tuesday afternoon trading following the report.
"We reiterate our accumulate rating as we believe the worst is behind the company and we are beginning to see improvements on the cost front," Merrill Lynch Analyst Heather Hay Murren said in a research note Tuesday.
"It looks like a good number," Ann Gillin Lefever, consumer products analyst at Lehman Brothers, told Reuters. "Volume was slightly stronger than we thought." Margins also were higher than she expected.
Cincinnati-based P&G also said it anticipates earnings per share growth in fiscal 2002 similar to the previous year, but below its own double-digit target. The company also expects first-quarter earning per share growth in the low to mid-single digits on flat sales volume and negative currency transactions.
Analysts currently expect first-quarter earnings per share of 91 cents versus 88 cents a year earlier, and fiscal 2002 earnings per share of $3.26, according to earnings tracker First Call.
For fiscal 2001, P&G posted earnings of $4.4 billion, or $3.12 a share excluding items, compared with $4.2 billion, or $2.95 a share, the prior year.
Including restructuring charges, the net earnings totaled $2.9 billion, or $2.07 a share, compared with net earnings of $3.5 billion, or $2.47 a share, in fiscal 2000.
Full-year revenue declined 2 percent to $39.2 billion from $40 billion.
"These results are the outcome of the plans we put in place this year – making tougher choices, focusing on our biggest brands and customers, and tighter cash and cost control," CEO A.G. Lafley said.
P&G, which has been struggling with a lagging growth rate as it faces fierce price competition from rivals, announced a broad restructuring plan in March that included eliminating 9,600 jobs. In June P&G said it would take a $900 million restructuring charge, more than twice its original estimate.
Separately Tuesday, P&G announced a partnership with the William W. Wrigley Co. to develop a cavity-fighting chewing gum under the Crest name. The venture is an opportunity for P&G to expand the toothpaste brand name while keeping costs in line.
For its fiscal year, P&G posted a 14 percent increase in health-care products sales to $4.35 billion, driven mainly by sales in its Iams pet food, pharmaceuticals and oral care businesses.
Beauty care sales increased 2 percent to $7.26 billion, excluding unfavorable currency exchange rates, due chiefly to deodorants and bar soaps.
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Fabric and home care sales declined 1 percent to $11.66 billion, as a result of stiff competition, the company said.
The company said its restructuring program remains on track for both costs and savings, and said it will raise its annual dividend 9 percent to $1.52 a share, effective Aug. 15. 
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Procter & Gamble
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