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P&G Profit Slips Due to Higher Commodity Costs

Net sales rose 9% to $21.92 billion.

Procter & Gamble said on Oct. 27 that profit fell 2% in its latest quarter.

Net sales rose 9% to $21.92 billion, better than the market forecast of $21.55 billion.

The company said its gross margin was squeezed mainly due to higher commodity costs.

But Bob McDonald, P&G chairman, CEO, said the first quarter was a "good start" to the fiscal year.

"We maintained strong top-line growth momentum in a difficult operating environment. We are well positioned -- due to continued top-line strength, recently implemented price increases and our productivity improvement and cost savings efforts -- to improve earnings growth as we progress through the fiscal year."

The Cincinnati, Ohio-based company has a presence in about 180 countries and sells such well-known brands as Tide laundry detergent, Gillette razors, Wella hair care products and Duracell batteries.

The company reiterated it expects a pick-up in operating profit growth in the second-half of its fiscal year.

"The improvement is expected to be driven by an increasing benefit from price increases, a declining impact from higher commodity costs and accelerating productivity improvements and cost savings," it said.

P&G, which says it serves about 4.4 billion people around the world, predicted sales would grow between 3%-6% in fiscal 2012, lowering its prior guidance of 5%-9% growth.

Copyright Agence France-Presse, 2011

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