The Procter & Gamble Company reported net earnings of $1.16 billion or $0.82 per share for the quarter ended September 30, 2000. Results include an $85 million after-tax charge related to the Organization 2005 restructuring program. Core net earnings, which exclude the Organization 2005 charges, were $1.24 billion for the quarter. Core net earnings per share were equal to the prior year at $0.88. Sales grew one percent, consistent with unit volume, reaching $9.97 billion. Excluding currency effects, primarily from the euro, sales grew four percent.
Earnings results were influenced by significant commodity-related cost increases and negative exchange impacts, which more than offset the benefits of pricing and a focus on growth of premium-priced products.
"We've delivered on expectations this quarter and are focused on continuing to improve our results and meeting expectations as the year unfolds," said P&G Chief Executive, A.G. Lafley. "We have a clear game plan to do this: lead innovation, build big brands and leverage global scale to create leadership market shares and total shareholder return."
Fabric and Home Care:
Unit volume was flat, as gains in North America laundry ahead of the price increase, were offset by softness in Western Europe. Net sales declined three percent to $3.08 billion, primarily reflecting a three percent unfavorable foreign exchange impact, driven by Western European currencies. Net earnings were $498 million, up three percent. Earnings progress was due to lower costs in developing markets, minor brand divestitures and lower taxes. Comparisons were impacted by strong results in the prior year, when significant initiative activity, including sell-in of Swiffer and Dryel, fueled eight percent sales and 10 percent earnings growth. The business continued to invest in new initiatives in the current quarter, with recent launches of Downy Wrinkle Releaser and Tide Tablets in North America.
Paper:
Unit volume was up one percent behind improved performance in diapers, notably in Latin America, and growth in Western Europe and China. Net sales also increased one percent to $3.04 billion, as pricing mitigated a four percent unfavorable exchange impact. Volume and sales growth reflected the successful introductions of new products in baby care and feminine care. Net earnings declined four percent to $329 million as progress in marketing, research and administrative spending was offset by unfavorable exchange rates. Significant commodity-related cost increases were countered by pricing actions, primarily in tissues/towel and feminine care.
Beauty Care:
Unit volume was flat versus year-ago as strong growth in hair care was offset by significant competitive activity in personal cleansing and deodorants in North America, and by Western Europe business softness. Net sales grew two percent to $1.87 billion, including a three percent unfavorable exchange impact. Sales were ahead of volume due to pricing and the continued focus on high-performance, premium-priced initiatives. Net earnings were $267 million, a 19 percent increase, reflecting the benefit of improved pricing, lower taxes and comparison to a weak year-ago base period.
Health Care:
Double-digit volume and sales growth in health care was led by continued outstanding progress on Iams pet health and nutrition business which was acquired in September 1999. Unit volume climbed 34 percent versus the prior year and sales grew 24 percent to $990 million, including a two percent negative impact from weaker currencies. Net earnings were $81 million, an 11 percent decline, as growth from acquisitions was outweighed by last year's high level of licensing and divestiture activity. Base business net earnings grew by double-digits, excluding the impacts of acquisitions, divestitures and licensing activities.
Food and Beverage:
Unit volume and sales declined 11 percent and 13 percent respectively, reflecting softness in both the snacks and beverage businesses. Pringles volume was down in part due to trade inventory builds in advance of an announced June price increase. The beverage business declined as a result of a heavy competitive climate in juice. Net sales were $1.05 billion, including a two percent negative impact from currency rate changes. Net earnings decreased 29 percent to $75 million, due to lower volume.
Second Quarter:
The company confirmed its prior guidance of core earnings per share growth in the mid-single-digits, or a range of $0.91 to $0.93 per share. October-December sales, excluding the impact of foreign exchange, are expected to be up slightly with volume down in the low-single-digits. The second quarter results will benefit from the company's ongoing minor brand divestiture program, including the divestiture of Clearasil. These results are against a particularly strong year-ago base period, where volume increased six percent and core earnings grew 11 percent, driven by a strong, new brand launch program.
This news release contains forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. In addition to the risks and uncertainties noted in this news release, there are certain factors that could cause results to differ materially from those anticipated by some of the statements made. These include achievement of the business unit volume and income growth projections, the achievement of the company's cost containment goals, and the timely divestiture of assets within the company's ongoing minor brand divestiture program, as well as factors listed in Management's Discussion and Analysis of Financial Condition and Results of Operations in the company's most recently filed Forms 10-K and 8-Ks.
Procter & Gamble markets approximately 300 brands to nearly five billion consumers in over 140 countries. These brands include Tide, Ariel, Crest, Pantene Pro-V, Always, Whisper, Pringles, Pampers, Olay, Iams and Vicks. Based in Cincinnati, Ohio, USA, P&G has on-the-ground operations in over 70 countries and employs more than 110,000 people worldwide.
Financial Tables
Earnings results were influenced by significant commodity-related cost increases and negative exchange impacts, which more than offset the benefits of pricing and a focus on growth of premium-priced products.
"We've delivered on expectations this quarter and are focused on continuing to improve our results and meeting expectations as the year unfolds," said P&G Chief Executive, A.G. Lafley. "We have a clear game plan to do this: lead innovation, build big brands and leverage global scale to create leadership market shares and total shareholder return."
Fabric and Home Care:
Unit volume was flat, as gains in North America laundry ahead of the price increase, were offset by softness in Western Europe. Net sales declined three percent to $3.08 billion, primarily reflecting a three percent unfavorable foreign exchange impact, driven by Western European currencies. Net earnings were $498 million, up three percent. Earnings progress was due to lower costs in developing markets, minor brand divestitures and lower taxes. Comparisons were impacted by strong results in the prior year, when significant initiative activity, including sell-in of Swiffer and Dryel, fueled eight percent sales and 10 percent earnings growth. The business continued to invest in new initiatives in the current quarter, with recent launches of Downy Wrinkle Releaser and Tide Tablets in North America.
Paper:
Unit volume was up one percent behind improved performance in diapers, notably in Latin America, and growth in Western Europe and China. Net sales also increased one percent to $3.04 billion, as pricing mitigated a four percent unfavorable exchange impact. Volume and sales growth reflected the successful introductions of new products in baby care and feminine care. Net earnings declined four percent to $329 million as progress in marketing, research and administrative spending was offset by unfavorable exchange rates. Significant commodity-related cost increases were countered by pricing actions, primarily in tissues/towel and feminine care.
Beauty Care:
Unit volume was flat versus year-ago as strong growth in hair care was offset by significant competitive activity in personal cleansing and deodorants in North America, and by Western Europe business softness. Net sales grew two percent to $1.87 billion, including a three percent unfavorable exchange impact. Sales were ahead of volume due to pricing and the continued focus on high-performance, premium-priced initiatives. Net earnings were $267 million, a 19 percent increase, reflecting the benefit of improved pricing, lower taxes and comparison to a weak year-ago base period.
Health Care:
Double-digit volume and sales growth in health care was led by continued outstanding progress on Iams pet health and nutrition business which was acquired in September 1999. Unit volume climbed 34 percent versus the prior year and sales grew 24 percent to $990 million, including a two percent negative impact from weaker currencies. Net earnings were $81 million, an 11 percent decline, as growth from acquisitions was outweighed by last year's high level of licensing and divestiture activity. Base business net earnings grew by double-digits, excluding the impacts of acquisitions, divestitures and licensing activities.
Food and Beverage:
Unit volume and sales declined 11 percent and 13 percent respectively, reflecting softness in both the snacks and beverage businesses. Pringles volume was down in part due to trade inventory builds in advance of an announced June price increase. The beverage business declined as a result of a heavy competitive climate in juice. Net sales were $1.05 billion, including a two percent negative impact from currency rate changes. Net earnings decreased 29 percent to $75 million, due to lower volume.
Second Quarter:
The company confirmed its prior guidance of core earnings per share growth in the mid-single-digits, or a range of $0.91 to $0.93 per share. October-December sales, excluding the impact of foreign exchange, are expected to be up slightly with volume down in the low-single-digits. The second quarter results will benefit from the company's ongoing minor brand divestiture program, including the divestiture of Clearasil. These results are against a particularly strong year-ago base period, where volume increased six percent and core earnings grew 11 percent, driven by a strong, new brand launch program.
This news release contains forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. In addition to the risks and uncertainties noted in this news release, there are certain factors that could cause results to differ materially from those anticipated by some of the statements made. These include achievement of the business unit volume and income growth projections, the achievement of the company's cost containment goals, and the timely divestiture of assets within the company's ongoing minor brand divestiture program, as well as factors listed in Management's Discussion and Analysis of Financial Condition and Results of Operations in the company's most recently filed Forms 10-K and 8-Ks.
Procter & Gamble markets approximately 300 brands to nearly five billion consumers in over 140 countries. These brands include Tide, Ariel, Crest, Pantene Pro-V, Always, Whisper, Pringles, Pampers, Olay, Iams and Vicks. Based in Cincinnati, Ohio, USA, P&G has on-the-ground operations in over 70 countries and employs more than 110,000 people worldwide.
Financial Tables
