Procter & Gamble Co. said Friday its third-quarter net income slipped 16 percent as price increases and an uptick in revenue did not offset high costs for raw material and others related to a restructuring.
The world's largest consumer product company also reduced its 2012 guidance due to volume declines in several markets where price increases caused the company to lose market share. Its stock slipped nearly 3 percent in premarket trading.
Consumer product companies across the board have been raising prices to deal with higher costs for materials like pulp, fuel and packaging. The results for P&G, which has an arsenal of products that include Tide detergent and Olay skin cream, illustrate that even big companies that sell trusted brands can lose customers to lower-priced rivals when they raise prices.
P&G said it is rolling back prices in six categories: Powdered laundry detergent in the U.S., Mexico and U.K., as well as North American oral care, dish care and blades and razors.
Still, most prices increases have stuck. While the company gained $3.3 billion in revenue through the increases, the rollbacks are worth about $100 million to $200 million, the company said in a call with reporters.
The company said net income fell 16 percent to $2.41 billion, or 82 cents per share during the January to March quarter. That compares with $2.87 billion, or 96 cents per share last year.
Results were impacted by a restructuring plan by P&G that involves cutting 5,700 jobs and saving $10 billion by the end of the fiscal year ending 2016. Excluding costs related to a cost-cutting plan, net income was 94 cents per share, a penny higher than analysts expected according to a FactSet poll.
Revenue rose 2 percent to $20.19 billion. Analysts expected $20.35 billion.
One bright spot during the quarter was P&G's North American laundry business. Its new Tide pods single-dose laundry detergent, which P&G estimates has captured 67 percent on the unit-dose market in one month. P&G hopes the pods will eventually account for 30 percent of the U.S. laundry business.
In 2012, Cincinnati-based company expects net income of $3.82 to $3.88 per share, excluding one-time costs, down from prior guidance of $3.93 to $4.03. Analysts expect net income of $3.99 per share.
For the fourth quarter, the company expects adjusted net income of 79 cents to 85 cents per share. Analysts expect 94 cents per share.
Shares fell $1.32, or 2.9 percent, to $64.99 in premarket trading. The stock is nearly flat since the beginning of the year.
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