Cost controls, emerging market growth boosts P&G profit

In this April 30, 2006 file photo, Tide detergent, made by Proctor & Gamble, is shown on a market shelf in New York. Kellogg Co. reported Wednesday, April 30, 2008, that its first-quarter profit dipped 2 percent, despite recent price increases intended to offset higher costs. (AP Photo/Mark Lennihan)

CINCINNATI—Consumer products maker Procter & Gamble Co. said Wednesday that price increases, cost controls and strong growth in emerging markets helped offset soaring costs of oil and other commodities as its third-quarter profit rose 8 percent.

P&G also lifted its full-year outlook, and its shares rose 1.8 percent.

The maker of Pampers diapers and Gillette razors reported a profit of $2.71 billion, or 82 cents per share, for the January-March period, compared with $2.51 billion, or 74 cents per share, a year ago. Revenue rose 9 percent to $20.46 billion from $18.69 billion last year.

Analysts had predicted a profit of 81 cents per share on revenue of $20.43 billion, according to Thomson Financial.

A.G. Lafley, P&G's chairman and chief executive, said the company remains optimistic about sustained growth for its many well-known household brands such as Charmin toilet paper, Crest toothpaste and Tide detergent, even in a slumping U.S. economy.

"Virtually everything we sell is not discretionary. You know, it's a staple," Lafley told analysts in a conference call. "You have to go to the bathroom. You have to get up in the morning and brush your teeth. You've got to shower. You've got to shave ... you've got to wash your clothes."

Earlier this year, P&G raised prices by 6 percent or more for products including Iams dog food, Cascade dishwasher detergent and Zest bar soap. The company said Wednesday it has increased spending on marketing and has more price hikes coming this summer, ranging from 4.5 percent on Tampax feminine products to 11 percent for Oral-B power toothbrushes.

The company now expects fiscal 2008 earnings to be between $3.48 and $3.50 per share, up from previous guidance of $3.46 to $3.50 per share. Analysts expect $3.49 per share.

For the first nine months of its fiscal year, P&G earned $9.06 billion, or $2.72 a share, up from $8.07 billion, or $2.37 a share, a year earlier. Nine-month revenue rose to $62.2 billion from $57.2 billion.

The company cited continued double-digit volume growth in developing markets and strong growth among key brands such as Pampers diapers, Gillette Fusion razors and Head & Shoulders shampoo. P&G projected that Fusion, the five-blade razor system introduced two years ago, will top $1 billion in sales for the fiscal year, making it P&G's 24th billion-dollar brand and the fastest to reach that level.

Pampers, for example, had growth rates in the high-teen percentages in emerging markets such as China, Russia and Poland, P&G said. Pantene shampoo had strong growth in China and Brazil, but was slow in U.S. markets, as were some other beauty product areas such as higher-end, "prestige" product sales in department stores.

Shares rose $1.15 to $67.05 on Wednesday. They have traded between $60.76 and $75.18 in the past year.

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