P&G 1Q profit up, cautions on costs

P&G 1Q profit up, cautions on costs

	Published : Tue, 30 Oct 2007 14:49 By : Agencies Print this Story

CINCINNATI (AP) - Consumer products maker Procter & Gamble Co. said Tuesday its first-quarter profit rose 14 percent, but said rising commodity, energy and product investment costs will hurt its second-quarter margins.

Its shares sank 4 percent in morning trading.

The maker of Tide detergent, Pampers diapers and Gillette shavers said net income grew to $3.08 billion, or 92 cents per share, for the July-September period from $2.7 billion, or 79 cents per share, a year ago. Excluding a German tax benefit of 2 cents per share, the company earned 90 cents per share in the latest period.

Sales rose 8 percent to $20.2 billion from $18.79 billion a year ago, with internal growth contributing 5 percent of the increase and the rest attributable to the weaker dollar. The company said its fabric and home care, baby and family care and grooming segments led the growth.

Analysts surveyed by Thomson Financial expected profit of 89 cents per share on revenue of $20.23 billion.

The company raised its fiscal-year outlook by 2 cents per share to reflect the one-time tax benefit, now forecasting a profit of $3.46 to $3.49 per share, up 14 percent to 15 percent from last year.

'The fiscal year is off to a good start,' A.G. Lafley, chairman and CEO, said in a statement. 'This momentum, along with a robust initiative pipeline for the year, gives us confidence that P&G will deliver another strong year of growth.'

However, the company expects earnings per share for its fiscal second quarter to range between 95 cents and 97 cents per share. Wall Street was looking for 97 cents a share.

P&G said gross margins are expected to be temporarily lower this quarter due to higher commodity and energy costs and investments needed behind its North America laundry initiative, in which it is offering concentrated formulas of Tide and other liquid detergents in smaller containers.

P&G said it expects gross margins to recover in the second half of its fiscal year due to pricing and increased cost savings from restructuring projects.

Its shares fell $2.87 to $68.96 in morning trading Tuesday. P&G shares have hit all-time highs in the past two months, and rose about 15 percent in the quarter. They have traded from $60.42 to $73.05 during the past year.