P&G organic sales increase 3% in Q3 FY'13

Net sales increased two percent to $20.6 billion in the January – March quarter, including unfavorable foreign exchange of one percent. Organic sales grew three percent on a unit volume increase of two percent and positive pricing of one percent.

Diluted net earnings per share were $0.88, an increase of seven percent versus the prior year period. Excluding non-core charges of $0.11 per share in the current year, core earnings per share were $0.99, an increase of five percent versus the prior year period.

Core gross margin increased 20 basis points. Manufacturing and productivity savings improved gross margin by approximately 170 basis points with higher pricing providing a 50 basis point improvement. These were partially offset by the impact of unfavorable geographic and product mix and innovation and new production capacity start-up costs.

Reported gross margin, including non-core restructuring charges increased 50 basis points. Core SG&A costs increased 10 basis points. Overhead cost savings of approximately 90 basis points was more than offset by higher marketing spending. Including restructuring costs and non-core impacts from the Venezuelan devaluation, reported SG&A increased 40 basis points.

Reported operating profit increased three percent. Core operating profit, excluding non-core charges, increased two percent driven by the higher gross margin, overhead productivity savings, and a lower core tax rate, partially offset by an increase in marketing spending.

The core tax rate was 22.2%, a decrease of about one percentage point versus the prior year and consistent with the Company’s guidance for the quarter. The reduction was primarily due to the fiscal year to date impact of the U.S. corporate tax law changes made in early January.

Fiscal Year 2013 Guidance

P&G is maintaining its organic sales growth guidance of three percent to four percent for the fiscal year. Foreign exchange is expected to reduce sales growth by two percent, resulting in guidance for all-in net sales growth of one percent to two percent versus the prior year.

The Company is increasing the low end of the range of core earnings per share guidance for the year by $0.02 to $3.96 to $4.04, up three percent to up five percent versus prior year core EPS of $3.85, behind strong productivity improvement and resulting cost savings. All-in earnings per share are expected to be in the range of $3.90 to $3.98, equating to growth of seven percent to nine percent versus prior year EPS of $3.66.

P&G