CINCINNATI (AP) -- Procter & Gamble said Thursday that its fiscal first quarter net income fell 7 percent, as costs related to restructuring and the stronger dollar weighed on results.
But the world's largest consumer products maker's adjusted results beat expectations on Wall Street, as it cut costs, made market share gains and commodity costs eased. The results were a much needed positive for CEO Bob McDonald, who some have criticized for not doing enough to turn around results. Shares rose 2 percent in premarket trading.
Procter & Gamble, which makes well known consumer goods including Tide detergent and Pampers diapers, said it held or grew market share in businesses representing over 45 percent of its sales during the quarter, up from 30 percent in the fourth quarter. That jumped to nearly 60 percent in the U.S., up from 15 percent in the fourth quarter. Its market share is still slightly down globally, but the Cincinnati company expects global market share gains by the second half of the year.
P&G admitted to missteps in pricing and in balancing growth in emerging markets, which account for about 30 percent of its sales, amid an uncertain global economy and lackluster market share growth overall. As growth in developed markets slowed, consumer product makers have looked abroad for new customers.
It is a tricky balancing act for all consumer product makers, particularly as the European economy remains under pressure and growth slows in China. On Wednesday Kimberly Clark said it will exit its European diaper business. And on Thursday Colgate said it will cut 6 percent of its workforce by the end of 2016.
In May P&G announced a plan to focus on its 40 top businesses, 20 biggest new products and 10 most profitable emerging markets, as it is undergoes a cost-cutting plan aimed at saving $10 billion by fiscal 2016.
"We're confident that this strategy will enable P&G to generate superior levels of shareholder return in both the short and long term," CEO McDonald said.
The pressure is on since activist investor William Ackman, known for agitating for change in companies he has a stake in, has disclosed that he has a 1 percent stake in the Procter & Gamble.
In the June-to-September quarter, Procter & Gamble's net income fell to $2.81 billion, or 96 cents per share. That's down from $3.02 billion, or $1.03 per share, last year.
Excluding restructuring and European legal charges, its so-called core earnings were $1.06 per share. Analysts expected 96 cents per share.
Revenue fell 4 percent to $20.74 billion. Analysts expected $20.79 billion. The stronger dollar, which cuts into the value of overseas sales, hurt revenue by six percentage points, the company said.
For the current quarter, Procter & Gamble predicts adjusted core earnings of $1.07 to $1.13 per share with revenue ranging from down 1 percent to up 1 percent, implying revenue $21.88 billion to $22.32 billion. Analysts expect net income of $1.09 on revenue of $21.76 billion.
For the full year P&G kept its guidance for adjusted core earnings of $3.80 to $4 on flat revenue growth to up 1 percent. That implies $83.68 billion to $84.52 billion. Analysts expect net income of $3.90 per share on revenue of $84.38 billion.
Procter & Gamble shares rose $1.52, or 2.2 percent, to $69.60 in premarket trading.