Gillette weakens P&G report after Peltz row
Procter & Gamble Co disappointed Wall Street with sales on Friday, hurt by continuing weakness in its Gillette business, a week after it claimed to have fought off hedge-fund manager Nelson Peltz`s move to muscle onto the board.
P&G, which spent millions battling Peltz`s charges of bureaucratic and ineffective management, reported higher sales of beauty and home care products. But a third straight quarter of declines in the grooming business that sells Gillette razors and Braun epilators weakened overall growth.
Net sales in the firm`s first quarter results rose just 1 percent to $16.65 billion, missing analysts` expectations of $16.69 billion and driving shares 3.5 percent lower in afternoon trading in New York.
The stock had been up 9 percent so far this year.
"The quarter was a little bit more challenging. ..than we would have expected going in with the run up of commodity cost and the impact of the natural disasters," P&G Chief Financial Officer Jon Moeller said on a call with analysts pointing to higher shipping costs in many geographies.
The world`s biggest household products maker has been losing market share to upstarts like Unilever`s Dollar Shave Club and has cut prices to try and shore up its men`s personal care business.
"Grooming was especially weak," RBC Capital markets analyst Nik Modi said noting that was steeper than his own estimate of a 2 percent decline.
Moeller said price cuts that have averaged at about 12 percent, caused the weakness in the value of sales in grooming. Weakness in Brazil also had a big impact, as consumers spent less amid an ongoing recession.
Stagnant sales are one of the issues Peltz had with P&G in his contentious and very public proxy fight for a seat on the company`s 11-member board.
Preliminary voting results show he lost the fight - the biggest and most expensive in U.S. corporate history - by a hair. His New York-based Trian Fund Management have said they will contest the vote and would not concede until an independent arbiter had certified the count.
P&G said it was maintaining its full-year organic sales and adjusted profit forecast. But it also said it expects a $300 million hit from commodity costs, in part due to the hurricanes that battered the southern U.S. this year.
Net income attributable to the company rose 5 percent to $2.85 billion or $1.06 per share in the first quarter ended Sept. 30.
Excluding items, the company earned $1.09 per share, beating analysts` average estimates by 1 cent.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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