Getty Images
Industryweek 9205 Procter And Gamble
Industryweek 9205 Procter And Gamble
Industryweek 9205 Procter And Gamble
Industryweek 9205 Procter And Gamble
Industryweek 9205 Procter And Gamble

P&G Earnings Dive on Lower Sales, Venezuela Charge

July 30, 2015
Chief financial officer Jon Moeller said the unpredictable foreign exchange market made it difficult to foresee when the company would turn around the trend of declining sales.

NEW YORK—Procter & Gamble offered a tepid sales outlook Thursday after reporting a huge drop in quarterly earnings due to lower revenues and a big charge in its Venezuelan operations.

Net income for the quarter ending June 30, P&G's fourth fiscal quarter of 2015, was $521 million, down 79.8% from the year-ago period.

Revenues fell 9.2% to $17.79 billion, marking the sixth straight quarter of declining sales.

Chief financial officer Jon Moeller said the unpredictable foreign exchange market made it difficult to foresee when the company would turn around the trend of declining sales.

The maker of such household items as Crest toothpaste and Tide detergent, P&G has responded to the rising dollar by gradually implementing price increases in local currencies. 

However, Moeller said the hit has been large in markets like Russia and Ukraine, where currency fluctuations have been significant.

P&G forecast a drop in 2016 sales "in the low-to-mid single digits" compared with 2015.

"We still have probably a few soft quarters ahead of us," Moeller said on a conference call with reporters.

"But that should strengthen sequentially as we get through the year and hopefully be at a market growth rate by the end of the year."

The biggest factor in the earnings drop was a $2.1 billion charge to change P&G's accounting for its Venezuela operations following a series of foreign exchange policy changes in the South American country.

Moeller said the policy changes made it impossible to account for Venezuela sales under the method used in other markets and that P&G would no longer count earnings from the country until it receives cash from its operations outside the country.

Net sales fell in all five business units, with the biggest drop in grooming at 18 percent. 

The decline in grooming reflects lower demand for shaving equipment with the rise in popularity of beards and facial hair, a trend Moeller described as "primarily a US dynamic."

Moeller said demand for shaving gear is on the rise in many developing markets. P&G owns Gillette and Braun, both of which make razors.

P&G's earnings came two days after the company announced it would promote David Taylor, head of its beauty, grooming and health care business, to be the next chief executive, succeeding A.G. Lafley.

Lafley has presided over a series of divestments capped by the agreed sale of 43 beauty and fragrance brands to Coty for $12.5 billion, announced earlier in July.

Sterne Agee said patience was needed before the advantages of the makeover are apparent.

"Longer term, we think organic growth should accelerate off a smaller base and sentiment should improve when growth returns," it said in a note. "We're just not there yet."

Quarterly earnings translated into $1.00 per share, five cents above analyst expectations.

Earnings for 2015 were $7.0 billion, down 39.6 percent from the prior year.

Annual sales dropped 5.3 percent to $76.28 billion.

In midday trade, P&G shares were down 3.4% at $77.89, the biggest decliner in the Dow. 

Copyright Agence France-Presse, 2015

Popular Sponsored Recommendations

Empowering the Modern Workforce: The Power of Connected Worker Technologies

March 1, 2024
Explore real-world strategies to boost worker safety, collaboration, training, and productivity in manufacturing. Emphasizing Industry 4.0, we'll discuss digitalization and automation...

Adopting an Open Ecosystem: The Way Forward for Frontline Operations

March 11, 2024
Today's manufacturing tech stack thrives on connectivity, integrating new and legacy players for a seamless operation - not on monolithic systems. Embrace the future of frontline...

3 Best Practices to Create a Product-Centric Competitive Advantage with PRO.FILE PLM

Jan. 25, 2024
Gain insight on best practices and strategies you need to accelerate engineering change management and reduce time to market. Register now for your opportunity to accelerate your...

Transformative Capabilities for XaaS Models in Manufacturing

Feb. 14, 2024
The manufacturing sector is undergoing a pivotal shift toward "servitization," or enhancing product offerings with services and embracing a subscription model. This transition...

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!