The Procter & Gamble Company increased core earnings per share by five percent to $0.99 for the January – March quarter. Diluted net earnings per share were $0.88, an increase of seven percent.

Non-core items include restructuring charges of $0.03 per share and a $0.08 per share charge from the balance sheet revaluation resulting from the devaluation of the Venezuelan currency in February.

Organic sales grew three percent. Net sales were $20.6 billion, an increase of two percent versus the prior year period including a negative one percent impact from foreign exchange.

P&G held or grew market share in businesses representing over 50 percent of sales in the January - March quarter, as measured on a constant currency value basis. In the U.S. market, P&G held or grew value share in businesses representing two-thirds of sales.

“We delivered another quarter of steady progress,” said Chairman, President, and Chief Executive Officer, Bob McDonald. “Top-line growth was in line with our expectations. Market shares improved broadly.

"Strong cost savings enabled us to exceed our outlook on the bottom line. We increased our dividend earlier this month, and we are now projecting to repurchase $6 billion in stock, which is at the high end of our estimated range. We expect further top-line improvement in the fourth quarter, driven by innovation and portfolio expansion, enabled by continued productivity improvement.”

Executive Summary
- Organic sales increased three percent for the quarter.
- Core net earnings per share increased five percent to $0.99.
- Core operating profit margin increased 10 basis points, including 260 basis points of productivity improvements and cost savings.
- Core gross margin increased 20 basis points. Reported gross margin, including non-core restructuring charges, increased 50 basis points.
- Core selling, general and administrative expenses (SG&A) as a percentage of net sales increased 10 basis points. Reported SG&A costs, including non-core items, increased 40 basis points as a percentage of sales.
- Operating cash flow was $3.9 billion for the quarter.
- The Company repurchased $1.0 billion of shares during the quarter and returned $1.6 billion of cash to shareholders as dividends.
- Earlier this month, P&G announced it increased the quarterly dividend by seven percent.
- The Company raised its share repurchase target to approximately $6 billion of stock for the fiscal year, the high end of its stated target range of $5 billion to $6 billion.

January – March Quarter Discussion

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.