The maker of Tide laundry soap and Crest toothpaste said Friday that its net income fell to $1.69 billion from $3.33 billion. Still, adjusted earnings per share of $1.10 beat analysts' estimates of $1.07. Including one-time charges, net income was 57 cents per share.
Cincinnati-based P&G is the world's largest consumer-products company and the maker of many well-known household brands, including Luvs diapers, Bounty paper towels and Charmin toilet paper.
The bulk of the one-time charges stemmed from the company's decision to write down the value of the appliances unit, where the biggest seller is electric shavers, and the salon professional unit.
The company noted that those items tend to be discretionary purchases, and it can be hard to persuade shoppers to buy things they don't absolutely need in a weak economy. Western Europe, where concerns about a debt crisis are crimping the economy, accounts for about half the sales for both units.
Revenue grew 4 per cent to $22.1 billion, helped by higher prices. That was roughly in line with the expectations of analysts polled by FactSet.
But P&G cautioned that sales volume slowed in the U.S., even as it grew in developing countries. That is similar to trends that many companies are noticing as U.S. customers keep a tight rein on spending. Executives also said that they didn't expect commodity costs to come down, but only to stabilize. Costs for many materials skyrocketed last year.
Like other U.S. companies that do business in foreign markets, P&G isn't getting the same benefits from foreign currency exchanges that it enjoyed last year. When the dollar is weak, as it was for most of last year, revenue raised overseas translates into more dollars when converted at headquarters. Executives said that was the main reason for its decision to downgrade its earnings estimate for the fiscal year, to $4 to $4.10 per share from $4.15 to $4.33.
In recent quarters, P&G has taken a strategy of selling to both high- and low-income consumers, betting that better-off customers will pay more for premium products like Tide Pods, a single-dose laundry detergent, while lower-income customers will spend on cheaper, more basic brands.