The Procter & Gamble Company (PG) recently reaffirmed its previously provided fiscal 2013 guidance at the Consumer Analyst Group of New York (:CAGNY) investor conference held in New York. The company also discussed some of its latest and future innovations and provided further insight into its cost saving/productivity improvement plan and turnaround efforts.
Fiscal 2013 Guidance Retained
The company retained its recently updated earnings outlook for third quarter as well as fiscal 2013. Last week, P&G reduced its third quarter and fiscal 2013 earnings expectations to include headwinds from the Venezuelan currency devaluation.
The consumer giant lowered its previously provided fiscal 2013 core earnings guidance by 3 cents from a range of $3.97 – $4.07 to $3.94 – $4.04 to reflect the impact of the Venezuelan government’s recently announced plan to devalue its currency, bolivar. In addition, P&G expects to record $200 million–$275 million ($0.07 per share – $0.09 per share) in one-time charges from revaluation of the Venezuelan balance sheet at the new exchange rate. Including one time charges, earnings are expected to range between $3.92 and $4.04.
Organic sales growth is expected to range between 3% and 4%. Net revenue is expected to rise between 1% and 2%.
In the third quarter, the company expects to earn 90 cents to 96 cents, down from prior expectations of 91 cents to 97 cents, to reflect the operating impact from the Venezuelan bolivar devaluation. However, including the one-time impact from balance sheet revaluation, earnings per share is expected in the range of $0.80 – $0.88.
In the third quarter of fiscal 2013, the company expects both net and organic revenues to range between 3% and 4%.
Innovation
Innovation is the driving force for the company and it is known for its impressive product development capabilities and marketing prowess.
P&G emphasized on its increased focus on discontinuous innovations like Tide Pods; which are breakthrough innovations of existing products, thereby making the existing products obsolete in the process. These change innovations often result in significant market share gains, provide competitive advantage, and sometimes redefine their respective product categories.
Over the next five years, P&G expects to launch up to three times as many change innovations as they have launched over the previous five years.
Cost Savings and Productivity Improvement
The company retained its productivity and cost savings plan announced in Feb 2012 to reduce spending across all areas (supply chain, research & development, marketing and overheads). The plan also includes improving net manufacturing productivity by 5% annually. The plan is expected to generate $10 billion in cost reductions by the end of fiscal 2016.