P&G Q3 Profit Dips Despite Sales Jump

Sales jumped 7% as households around the globe responded to new products, price cuts and stepped-up advertising.

Procter & Gamble Co. reported on April 29 that its profit fell 1% in its third quarter, hurt by charges including from the U.S. health care overhaul. But sales jumped 7 % as households around the globe responded to new products, price cuts and stepped-up advertising.

The maker of Tide detergent and Pampers diapers reported net income of $2.59 billion, or 83 cents per share, for the quarter. That compares with $2.61 billion, or 84 cents a year ago, while sales rose to $19.2 billion.

P&G's chief executive said the results topped the company's core earnings goals, as P&G stepped up marketing, cut some prices, and rolled out new products across price tiers. P&G said U.S. sales were strong for the "basic" versions of Charmin toilet paper and Bounty paper towels and in western Europe for a lower-tier Pampers called Simply Dry.

P&G is trying to combine brand strength with lower-priced alternatives to draw shoppers back from store brands, while also grabbing their attention with upgraded products.

"We are doing what we have to do price-wise to stay price-competitive," Bob McDonald, chairman and CEO, told investors on a conference call. But he said stepped-up innovation has not only produced a low-priced version of Tide in India that's off to a strong start but also the Gillette ProGlide shaver, hitting U.S. store shelves in June, that will cost about 10% more than the top-selling Gillette Fusion.

"So we are just doing what we have to do to continue to win the consumer value equation, and we are attempting to do that through the strongest innovation program that we've had in my 30-year career," McDonald said.

P&G, which introduced new versions of Pampers, Crest toothpaste and Olay skin cream during the quarter, said broad-based growth included double-digit sales volume increases in emerging markets.

The company says it expects sales to rise 6%-7% in the current fourth quarter, with earnings per share in a range of 68 cents to 74 cents.

Copyright 2010 The Associated Press.

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