P&G experiences 'challenging' Q2

CINCINNATI — Procter & Gamble reported a decrease in second-quarter net sales as segment results proved to be a mixed bag.



"The October - December 2014 quarter was a challenging one with unprecedented currency devaluations," stated chairman, president and CEO A.G. Lafley. "Virtually every currency in the world devalued versus the U.S. dollar, with the Russian Ruble leading the way. While we continue to make steady progress on the strategic transformation of the company — which focuses P&G on about a dozen core categories and 70 to 80 brands, on leading brand growth, on accelerating meaningful product innovation and increasing productivity savings — the considerable business portfolio, product innovation, and productivity progress was not enough to overcome foreign exchange."



P&G reported second quarter core earnings per share of $1.06 versus $1.15 the prior year. On a currency-neutral basis, core earnings per share increased 6%. Diluted net earnings per share of 82 cents, including non-core items, which reduced diluted EPS by 24 cents per share. Organic sales grew 2% for the quarter. Reported net sales were $20.2 billion, a decrease of 4% versus the prior year, including a negative five-percentage point impact from foreign exchange.



In the beauty, hair and personal care segment organic sales decreased 1% driven primarily by declines in the prestige and skin and personal care categories. This was partially offset by innovation-driven sales growth in the salon professional and antiperspirant and deodorant businesses.



Meanwhile, grooming segment organic sales increased 2% due to higher pricing and innovation on Gillette grooming and innovation on Braun. This growth was partially offset by lower shipment volume.



Healthcare segment organic sales increased 1% behind growth in oral care from innovation and increased pricing. These improvements were partially offset by lower volume in personal health care.



Baby, feminine and family care segment organic sales increased 4% behind pricing and innovation in baby care and feminine care, partially offset by lower sales in family care due to a soft period in Mexico and consumer value interventions in the United States.



Lafley added that, "The outlook for the year will remain challenging. Foreign exchange will reduce fiscal 2015 sales by 5% and net earnings by 12%, or at least $1.4 billion after tax. We have and will continue to offset as much of this currency impact as we can through productivity driven cost savings. And we will continue to invest in our businesses, brands and product innovation, because it is the right thing to do for the mid- and long-term, while we deliver another year of strong cash returns to shareowners. We are adjusting fiscal year earnings targets accordingly. We are mobilized to deliver another fiscal year of modest organic sales growth, and to continue to grow market share on more category-leading brands. We are working to deliver core earnings per share as close as possible to those of last fiscal year."