NEW YORK (AP) — As Procter & Gamble posted quarterly results on Thursday that beat Wall Street expectations, newly reinstalled CEO A.G. Lafley promised a leaner, more focused company.
In his first remarks since retaking the helm of the world's largest consumer products company in May after a stint in the same job from 2000 to 2009, Lafley said P&G is targeting cost cutting and growing its largest and most profitable brands.
Lafley's comments came after P&G reported that while fiscal fourth-quarter net income dropped 48 percent due to a write-down related to its Braun Appliance business and other one-time costs, its adjusted profit and revenue beat Wall Street expectations.
"We will continue to make choiceful investments in core brands, our biggest innovation opportunities, and in our core developed and most promising developing markets," he said.
Analysts and investors had been interested to hear how Lafley, who replaced former CEO Bob McDonald, plans to rejuvenate the business. Shares of the company, which makes products that include Tide detergent and Crest toothpaste, rose nearly 2 percent to close at $81.62. The stock is up 18 percent since the beginning of the year.
Oppenheimer analyst Joe Altobello said sales trends were better than expected but kept his "Market Perform" rating on the stock.
"While encouraged by these results, we believe the necessary improvements at P&G will take time, and the stock seems to already reflect further momentum," he wrote in a client note.
P&G has been working on a turnaround effort aimed at focusing on its top 40 top businesses, 20 biggest new products and 10 most profitable emerging markets as it undergoes a cost cutting plan aimed at saving $10 billion by fiscal 2016.
Lafley said he had spent the last two months doing a "deep dive" to understand consumers and its markets. He said the key for P&G going forward will be to create perceived "value" for consumers with its products, be it a $145 SKII face cream or a $1 roll of Charmin toilet paper, he said.
"We're not consistently winning now, but we're committed to making changes to significantly improve performance," he said.
One goal for P&G will be to improve the company's beauty business. Two of its largest brands, Pantene hair care products and Olay skin cream — worth a combined $5 billion in annual sales — have been sluggish. Lafley said the company has revamped plans for the two brands and expects business to improve in coming months.
"Hey, we stalled," he said. "But we know what to do and we're on it."
P&G said after paying preferred dividends, net income totaled $1.88 billion, or 64 cents per share, for the three months ended June 30. That's down from $3.63 billion, or $1.24 per share, in the prior year quarter.
Excluding one-time items, adjusted earnings totaled 79 cents per share. That beat analysts' expectations of 77 cents per share, according to FactSet.
One-time items included restructuring charges, legal fees in Europe and a 10 cent per share impairment charge related to its Braun Appliances business. That was due to the weakening of the Japanese yen, since a large part of Braun Appliances earnings are generated in Japan, the company said. The stronger dollar hurt results by 6 cents per share.
Revenue rose 2 percent to $20.66 billion, helped by volume growth and higher selling prices. Analysts expected revenue of $20.54 billion.
Volume rose 5 percent in total, with a 6 percent rise in fabric and home care and a 4 percent rise in beauty volume. Grooming, which includes razors and shaving cream, was flat.
For the year, net income after paying preferred dividends rose 5 percent to $11.31 billion, or $3.86 per share. That compares with net income of $10.76 billion, or $3.66 per share in the prior year. Revenue rose 1 percent to $84.17 billion from $83.68 billion a year ago.
In fiscal 2014, the company expects earnings excluding one-time items to rise 5 percent to 7 percent, implying results of $4.25 to $4.33 per share. It expects revenue to rise 1 percent to 2 percent, implying revenue of $85 billion to $85.85 billion. Analysts expect earnings of $4.32 per share on slightly higher revenue of $86.47 billion.
Citi Investment Research analyst Wendy Nicholson said guidance seems high but could be possible.
"We are optimistic that with A.G. Lafley now back at the helm, growth will indeed accelerate - funded by innovation and cost discipline," she wrote in a note.
The company said it will stop giving quarterly guidance, but will continue to give fiscal year guidance and update it on a quarterly basis.