P&G results top views; quarter outlook falls short

CHICAGO (Reuters) - Procter & Gamble Co posted a bigger-than-expected rise in quarterly profit on Friday, as cost cuts and price increases helped mitigate the impact of more expensive materials and some sluggish markets such as the United States.

P&G also gave its first forecasts for its new fiscal year. The world's largest household products maker is likely to miss Wall Street estimates this quarter as it absorbs higher costs for oil and paper-based materials and has not yet pushed through all its price increases.

Shares of P&G, whose lineup includes Gillette razors and Olay skin creams, rose 1.4 percent to $60.40 in premarket trading. The stock had fallen 1.9 percent in Thursday's broad market sell-off.

Stifel Nicolaus analyst Mark Astrachan said the earnings beat stemmed in part from a lower tax rate and a gain from a sale of a brand, while margins came in lower than expected.

"Overall, we find the result disappointing, albeit unsurprising," he said, "given macro uncertainty and continued weak consumer spending in developed markets."

Consumers are still buying the company's products, although sales are better in developing markets, where P&G sells more of its lower-priced items.

That is likely to continue to be the case in the near term.

"We've not seen dramatic changes in consumer behavior over the last few months," said Chief Executive Officer Bob McDonald.

P&G is giving a wider profit forecast range than usual for fiscal 2012, which "reflects the volatility that exists in the macro environment," said Chief Financial Officer Jon Moeller.

The company expects sales and earnings to be stronger in the second half of the year than the first half, in part because commodity costs are much higher in the first quarter than they were a year earlier, he added.

P&G has been raising prices to help offset the increase in costs for oil-based materials and other goods. It already announced or implemented price increases on brands that account for about 60 percent of its U.S. sales so far this calendar year, said McDonald.

The company has also pulled back on some promotional spending as other household products makers have been doing, he added. That also has the effect of raising prices for consumers.

FIRST-QUARTER PROFIT VIEW BELOW STREET

P&G earned $2.51 billion, or 84 cents per share, in the fourth quarter ended in June, compared with $2.19 billion, or 71 cents per share, a year earlier.

Analysts on average expected earnings of 82 cents per share, according to Thomson Reuters I/B/E/S.

Sales rose 10 percent to $20.86 billion, while analysts had forecast $20.63 billion.

Organic sales, which strip out the impact of acquisitions, divestitures and foreign exchange fluctuations, rose 5 percent. About 1 percentage point of that growth probably came from retailers buying products ahead of price increases, Moeller said. The volume of goods sold rose 3 percent.

For the first quarter ending in September, P&G forecast earnings per share of $1.00 to $1.04 from continuing operations, with organic sales up 2 percent to 4 percent.

For the fiscal year, P&G said it expected earnings per share of $4.17 to $4.33 from continuing operations, with organic sales up 3 percent to 6 percent.

Analysts were expecting earnings of $1.14 this quarter and $4.26 this year.

(Reporting by Jessica Wohl; Editing by Lisa Von Ahn)