By Cliff Peale
Enquirer staff writer
Despite increasing costs for raw materials such as coffee beans and increased promotional spending by competitors, Procter & Gamble Co. earned $2 billion, or 73 cents per share, for the fiscal first quarter ended Sept. 30, the company said Wednesday.
That's 14 percent more than the same period last year.
Sales increased 13 percent to $13.74 billion, and unit volume, or the number of products sold, jumped 12 percent.
The company's expansion of profit margins slowed as it paid the higher costs and poured marketing funds behind its growing brands.
Chairman and Chief Executive A.G. Lafley told Wall Street investors the company would continue the same strategy, and expected to meet its sales and profit goals for the full fiscal year that started July 1.
"Our pipeline, frankly, has been growing," Lafley said.
"We've been trying to balance our investments in that pipeline with our commitments to shareholders. I think you'll see the margins come, but the margins will come over time. We try to keep things in balance."
Concern about the rising materials costs caused P&G shares to fall back after the early-morning earnings announcement. The stock price fell $1.43, or 2.7 percent, to close at $51.78 per share.
For the full year, P&G expects prices for paper pulp and natural gas to increase about 15 percent. Plastics, including those used for packaging, also are more expensive.
The company has raised prices on detergent in some countries, as well as pet food and paper products such as Bounty and Charmin. And it continues to push for lower operating costs.
Chief Financial Officer Clayton Daley said margins should recover over the full fiscal year - except in fabric and home care, where costs have increased the most.
Dan Popowics, an equity analyst at Fifth Third Asset Management, which controls about 20 million P&G shares, said the company's sales and profits met expectations.
But fears from outside about increased costs and competitive spending affected the stock, he said, despite strong sales growth.
The first quarter follows one of the strongest financial years in P&G's history. It's also the first time P&G has reported results in three reorganized business segments: beauty care; health, baby and family care, and household care.
Beauty care delivered strongest results, with sales up 24 percent to $4.66 billion, and earnings up 16 percent to $692 million.
In the baby, health and family care unit, sales increased 8 percent to $4.69 billion, and earnings increased 3 percent to $575 million.
And the household unit, which includes brands such as Tide, Dawn, Folgers and Pringles, saw sales jump 10 percent to $4.55 billion and earnings jump 4 percent to $683 million.
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