Procter & Gamble (PG) reported results for the fourth quarter with earnings of $0.80 per share, above the Zacks Consensus Estimate and flat year-over-year. For fiscal 2009, earnings were $4.26 per share, above management’s guidance.
Net sales for the quarter declined 10.6% year-over-year to $18.7 billion, as a 5% benefit from pricing was fully offset by a 5% decline in unit volume, a 9% unfavorable impact of foreign currency and a 1% impact of divestitures. However, successful product launches, supported by marketing initiatives, contributed to the top line. Organic sales declined 1% during the quarter.
For fiscal 2009, net sales contracted 3.3% to $79.0 billion, driven by a 4% unfavorable impact of foreign exchange, 1% unfavorable impact of product mix and 3% volume decline, which were partially offset by a 5% gain from pricing. Organic sales increased 2% for the year.
All three Global Business Units (GBU) witnessed revenue declines during the fourth quarter and fiscal 2009. The Beauty segment declined in fiscal 2009, with the low single-digit growth in retail hair care volumes offset by the mid-single-digit decline in Skin Care. In addition, low single-digit declines in blades & razors impacted the Grooming division. Strong growth of Gillette and Fusion brands were offset by declines in Braun.
The Household Care segment was impacted by a low single-digit decline in Fabric Care and Home Care segments. The decline in Fabric Care was due to lower shipments of Tide and Ariel, while Home Care was impacted by market contractions and trade inventory reductions. In the Baby Care division, volume increased low single-digits due to growth of Pampers and Luvs which was partially offset by low single-digit declines in the Family Care division due to the Western European Tissue Divestiture.
The Health and Well Being segment was impacted by low single-digit volume decline in the Oral Care business. Feminine Care also declined low single-digits.
In addition, Pharmaceuticals declined high single-digits and Personal Health business declined double digits. The Snacks division witnessed decline in high single-digits due to lower merchandising activity, reduced trade inventory and a high base period, which included the Rice Infusion, Extreme Flavors and Stix product launches. The Pet Care segment declined mid-single-digits as a result of lower net sales, higher commodity costs, unfavorable foreign exchange and a higher tax rate.
The company reiterated its guidance for fiscal 2010 and provided a first look at the first quarter guidance. For fiscal 2010, management confirmed previous guidance for organic sales growth of 1% to 3%.
Foreign exchange is expected to negatively impact net sales by 0% to 1%, reflecting a modest improvement versus the previous guidance of a negative 2% to 3% impact. The company reiterated its earnings per share guidance of $3.65 to $3.80 from continuing operations and plans to re-invest the benefit of improved foreign exchange into long-term growth.
For the first quarter, management expects organic sales growth of 0% to negative 3%. Foreign exchange is expected to impact sales by approximately 7%. Therefore, net sales are expected to be down 7% to 10% versus the prior year. Earnings are expected in the range of $0.95 to $1.00 per share.
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