Profit outlook raised again by Procter & Gamble Co.

Rise of 14% to 16% expected for quarter

September 06, 2002|By BLOOMBERG NEWS

NEW YORK - Procter & Gamble Co., the largest U.S. household-goods maker, raised its profit forecast yesterday for the fourth consecutive quarter as it reduces costs and sells more new products such as Crest teeth-whitening strips.

Profit in the first quarter, which ends Sept. 30, will rise 14 percent to 16 percent a share, spokeswoman Linda Ulrey said. Last month, the company estimated that earnings would increase by 11 percent to 15 percent. Sales will rise about 7 percent to 9 percent, led by health-care products and emerging markets such as China.

Procter & Gamble is the biggest gainer in the Dow Jones industrial average this year as investors seek companies with steady profits during an economic slowdown. Since becoming chief executive two years ago, A.G. Lafley has cut 9,600 jobs, sold declining brands such as Comet cleaner and introduced lines including Crest Whitestrips and SpinBrush electric toothbrushes.

"The beat goes on," said Daniel Popowics, an analyst at Fifth Third Bank, which manages more than $30 billion in assets and owns 9.8 million Procter & Gamble shares. "It underlines the consistency in the company. There is a higher-margin mix of products starting to kick in."

Procter & Gamble was forecast to earn $1.09 a share in the quarter, excluding certain costs, according to the average forecast of analysts surveyed by Thomson First Call. That's a 14 percent increase from the 96 cents a share a year earlier.

"Lafley has turned things around," said Carl Domino, president of Northern Trust Value Investors, which manages about $2 billion and whose parent owns 11 million shares. "He took a company that was struggling and brought about stability and now growth."

Procter & Gamble has also benefited from a weaker dollar, which raises the value of foreign earnings. The company said currency changes will add to sales this quarter. The euro has increased 12 percent vs. the dollar this year.

Shares of Cincinnati-based Procter & Gamble rose $1.29 to $89.85 on the New York Stock Exchange yesterday. The stock had increased 13 percent this year.

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