P&G profit falls short as marketing costs rise

Procter & Gamble Company's fourth-quarter net income fell 12 per cent, while sales rose as the maker of Tide and Pampers stepped up marketing and new product development.

P&G projected more sales growth for the year ahead.

The profit slide was larger than Wall Street expected, which hit shares in premarket trading. They fell US$2.32, or 3.7 percent, to US$59.74.

The company says it has been spending more on innovation and marketing. It has boosted sales in a tough economy with price cuts, cheaper versions and upgraded premium products of its big-name brands, and more advertising.

Bumped up ad spending

The world's biggest advertiser reported it bumped up ad spending by more than US$1 billion in the past year, to US$8.6 billion total.

Foreign exchange impacts also undercut profits in the quarter, P&G reported Tuesday.

The Cincinnati-based consumer products giant says it earned US$2.2 billion, or 71 cents per share, down from nearly US$2.5 billion, or 80 cents a share, a year prior. Revenue increased five per cent to US$18.9 billion.

Analysts expected 73 cents a share on US$19.1 billion in revenue.

Organic sales, a key measure that excludes currency fluctuations, acquisitions and other such changes, grew four percent for the quarter and three per cent for the year.

P&G totalled US$78.9 billion in sales for its fiscal year, up three per cent.

Company officials told reporters in a conference call that they're seeing broad-based sales growth across product lines and regions, and that P&G is also building or holding market share everywhere.

P&G expects more sales growth in the coming year, projecting organic sales up 4-6 per cent with net sales up 2-4 per cent. The company expects earnings in a range of US$3.91 to US$4.01 per share.

Analysts surveyed by Thomson Reuters expect US$3.98 on average.

For the current quarter, P&G expects revenue to grow 1-3 per cent. Adjusted for discontinued businesses, acquisitions and foreign exchange effects, it expects sales to grow 3-5 per cent, with earnings of 97 cents to US$1.01 per share. Analysts expect US$1.04.

- AP