P&G cuts forecast, will focus on big businesses
By Brad Dorfman and David Jones
CHICAGO/LONDON (Reuters) - Procter & Gamble Co took the blame on Wednesday for a lack of big new products and not being quick enough to cut costs as it deals with persistent slowing demand in Western Europe, the United States and China.
The world's largest household-products maker cut its growth forecasts for a second time in two months on Wednesday, as expected, and said it did not expect to repurchase shares in the coming fiscal year as it tries to maintain its "AA-" credit rating.
P&G's comments come a day after shipping company FedEx Corp warned about slowing global economic growth, and foodmaker Danone SA said its profits would be hit as Spanish consumers switched to cheaper yogurt.
The U.S. maker of products such as Tide laundry detergent and Gillette razors said it would focus on its 40 biggest businesses, 20 biggest new products and 10 most important developing markets in a bid to shore up profits.
P&G's shares fell 3.2 percent to $60.20 in afternoon trading on the New York Stock Exchange. Shares of several P&G rivals with global exposure, including Unilever and Colgate-Palmolive, also fell.
While analysts said the company seemed to be taking the right steps to spur operating profit growth, which has stagnated during Chief Executive Bob McDonald's three years at the helm, there was concern the plans would take some time to bear fruit.
"The company's margin of error seems narrow ... cementing P&G as another (consumer packaged goods) 'show-me' story over the next 12 months," said Sanford Bernstein analyst Ali Dibadj.
He suggested during an interview that McDonald's job could be at stake if there was another earnings disappointment next year. Continued...