P&G Profits Up But Revenue Falls Short

Packaged goods brands cites 'choppy' global market

While Procter & Gamble's profits rose 6 percent in the third quarter due to cost-cutting and gained market share in North America, revenue fell short of analyst expectations, The Washington Post reported. P&G also issued a fourth-quarter outlook that fell short of Wall Street expectations. 

To explain its modest revenue gains, the company cited "choppy" global market growth and mixed responses to its new consumer products. Shampoo and skincare sales fell in the last quarter, and P&G is still struggling to beat competitors Unilever and Colgate in emerging markets. 

Excluding restructuring charges, and factoring in the devaluation of Venezuela's currency, P&G earned 99 cents per share, falling short of analysts' estimates of 96 cents.

Net income for the third quarter rose to $2.57 billion, or 88 cents per share, compared to last year's net income of $2.41  billion, or 82 cents. Revenue rose 2 percent to $20.6 billion, falling short of analysts' expectations of $20.72 billion. P&G did well in North America with sales of its new Tide Pods and—thanks to a particularly nasty cold and flu season—personal healthcare products.

P&G expects fourth-quarter net income of 69 cents to 77 cents per share, compared to analysts' expectation of 82 cents per share.

The company is in the middle of a turnaround, which is proving to be slow-paced. In February 2012, the packaged goods giant introduced a plan to recoup losses incurred by aggressive expansion efforts in emerging markets such as China and India—where the company generates nearly 40 percent of its revenue. With a goal of saving $10 billion by 2016, P&G decided to focus on its 20 biggest new products and its 10 most profitable emerging markets. The plan also included thousands of job cuts.

The slow pace of P&G's turnaround could put one more job on the line: activist investor Bill Ackman is looking for a reason to oust McDonald as CEO.