Consumer goods giant Procter & Gamble yesterday [Tuesday] stated that it expects earnings growth for the March 2002 quarter to exceed prior guidance behind strong volume and cost performance. 

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Core earnings per share growth are expected to achieve the double-digit level and exceed current Wall Street analysts’ consensus estimates. This improvement is after adjusting the base period for comparable accounting treatment for goodwill and intangible assets.


President and CEO A. G. Lafley said: “We are seeing clear progress on a broad range of businesses. Our focus on more choiceful business strategies, better consumer value and improved cost and cash management is starting to pay off. This is particularly encouraging in light of challenges in the global economic environment.”


Volume growth is expected to increase nine to 10% behind the Clairol acquisition and strong performances by the health care and fabric & home care business units. Excluding the impact of acquisitions and divestitures, volume growth is forecasted to be in the mid single digit range.


Sales, excluding foreign exchange, are expected to finish the quarter with growth in the high single digits. Foreign exchange is forecasted to negatively impact the top line by  about 3% due to weakness in the euro, the Argentinean peso and the yen.

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The company’s earnings improvement is being driven by a combination of both volume growth and cost reductions, despite negative foreign exchange effects. Operating margins for the quarter are expected to grow ahead of previous guidance, aided by strong improvements in all business units.


Lafley said: “We are pleased that we are delivering increased top and bottom line growth.  While we still have more to do, we feel good about P&G’s progress.”


For fiscal 2002, P&G said it remains comfortable with the guidance range provided previously. Core earnings per share are expected to grow at a rate that exceeds last fiscal year’s growth, but not yet at the company’s long term growth target of double digits.


Sales, excluding foreign exchange impacts, should grow at a rate faster than last year but not yet at the company’s long term growth target of 4-6%. Foreign exchange is expected to negatively affect the top-line growth by about 2%. The estimates include the impact on the results from the planned spin merger of the Jif and Crisco brands to the J. M. Smucker Company, which is expected to dilute earnings per share in the Q4 of the fiscal year.