Procter & Gamble Co (PG)

[dr_praeses]

Procter & Gamble net climbs 19% on new products
Company to buy back up to $30 billion in shares

Full Story at MarketWatch
By Andria Cheng, MarketWatch
Last Update: 8:59 AM ET Aug 3, 2007

NEW YORK (MarketWatch) -- Consumer products giant Procter & Gamble Co. said fiscal fourth-quarter profit rose 19%, helped by new products such as Gillette Fusion five-blade razors.
The company on Friday also gave profit forecasts that missed analysts' estimates as it plans to buy back as much as $30 billion in shares over the next three years.

Net income in the quarter ended June 30 rose to $2.27 billion, or 67 cents a share, from $1.9 billion, or 55 cents, a year earlier, the Cincinnati-based company said Friday. Sales rose 8% to $19.3 billion.

New products such as Crest Pro-Health toothpaste and Tide Simple Pleasures also lifted sales. Chief Executive A.G. Lafley increased sales an average of 12% the past five years through 2006 as he bought Gillette to gain brands such as Oral-B oral care line to help expand in health and beauty products. Emerging markets such as China are also a growth focus, P&G has said.

"There's a lot more consumer spending targeted in the health and beauty care," said Jon Fisher of Fifth Third Asset Management, which owns P&G shares. "They've got a broad product offering."

Analysts, on average, expected the company (PG) to earn 66 cents a share on revenue of $19.1 billion, according to Thomson Financial.

Procter & Gamble, which also makes Pampers diapers and Pantene shampoo, forecast per-share profit of 88 cents to 90 cents in the fiscal first quarter and profit of $3.44 to $3.47 for the year. Sales are expected to rise as much as 8% in the quarter and up to 7% for the year.

Analysts surveyed by Thomson estimated profit of 91 cents for the first quarter and $3.48 a share for the year.
"While we think investors will appreciate the step-up in long term share repurchases, we think the lower than expected (per-share profit) guidance for FY08 (with higher share repurchases) will get more attention in the market today," said Lehman Brothers analyst Lauren Lieberman in a note.

New products

P&G said it would buy back between $8 billion and $10 billion in shares in each of the next three years. In fiscal 2007, it bought back $5.6 billion of its own shares. Lieberman said she had estimated about $7 billion for fiscal 2008.
Organic sales, a closely watched metric that excludes acquisitions, divestitures and the impact of foreign currency translations, rose 5% in the fourth quarter. The company previously said organic sales would increase as much as 6%.
P&G recently introduced the Febreze Candle with an odor-eliminating feature and is pushing the Pro-Health toothpaste that it said protects cavities and other common dental problems. In May, Lafley reorganized the company's business units into three divisions -- beauty care, global health and well being, and household care -- as he plans to expand further into health and beauty products, which generate higher margins than the company's household lines.
Since 2000, Lafley has bought the Clairol and Wella hair products and Gillette razor businesses.

P&G's growth hasn't gone unchallenged. One rival, Colgate Palmolive Co. (CL), maker of Colgate toothpaste which competes with P&G's Crest, said last week quarterly profit surged 47% after record advertising, including campaigns featuring actress Brooke Shields to tout its new Colgate Total toothpaste, helped lift sales by 13%.

Another competitor, Kimberly-Clark Corp. (KMB), also said last week profit jumped 22%, boosted by new Huggies diapers and gains in markets including China and Russia.
European rival Unilever (UL) said Thursday profit jumped 16% as sales benefited from increased advertising as well as demand from China, India and Indonesia.

"The space has gotten more competitive with competitors being more aggressive," Fisher said. End of Story

Andria Cheng is a MarketWatch reporter based in New York.