(Reuters) - Procter & Gamble Co cut its profit outlook for the year on Friday as weakness in developed markets, more attractive pricing by competitors, and the need to slash prices in Venezuela pressured margins as it overhauled its business.
The world’s largest household products maker also continues to feel the pinch of higher costs for commodities such as diesel fuel, alcohol and chemicals, and is working on a new restructuring plan.
Shares of P&G, which makes Pampers diapers and Gillette razors, fell 3.2 percent to $64.75 on the New York Stock Exchange.
Many analysts were frustrated that the company’s restructuring wasn’t yielding results fast enough, as P&G continued to underperform its peers.
“Where is the taking responsibility for the weak numbers, as opposed to saying ‘not our fault, it’s just really tough out there’?” Citigroup analyst Wendy Nicholson said on a conference call.
P&G Chief Executive Bob McDonald said that as CEO, he took responsibility. But the admission didn’t satisfy analysts.
“How long do you expect investors to wait? How long does your current plan have to work? How much patience does the board have?” asked Sanford Bernstein analyst Ali Dibadj.
McDonald, who became CEO in July 2009, said the company has not innovated enough in certain areas, particularly beauty care in the United States. More broadly, he blamed flat volume growth in the categories where P&G competes.
“The CEOs I talk to basically say that they see a decelerating trend,” McDonald told reporters. Much of the growth in developed markets “will be share growth, because the markets aren’t growing,” he said.
P&G, like many other household products makers, has raised prices to mitigate the impact of higher commodity costs.
The company rolled out $3.5 billion worth of price increases this year, but about $100 million to $200 million of them didn’t stick as competitors didn’t match them, Chief Financial Officer Jon Moeller said on the call.
Now P&G is rescinding some of the increases, either by lowering prices, or keeping them unchanged while increasing the size of the products. The rollbacks are coming in laundry detergent in the United States, Britain and Mexico, and North American oral care, dishwasher detergent, and blades and razors.
In Venezuela, where P&G sales are worth an annual $1 billion, new regulations forced P&G to cut prices by as much as 25 percent, Moeller said.
Earnings fell to $2.41 billion, or 82 cents per share, in the third quarter through March, from $2.87 billion, or 96 cents per share, a year earlier.
The company took charges for its restructuring, which involves cutting 5,700 nonmanufacturing jobs and $10 billion in costs by the end of fiscal 2016.
Core earnings per share, which excludes items such as restructuring charges, were flat at 94 cents. The results topped analysts’ expectations of 93 cents, according to Thomson Reuters I/B/E/S. Sales grew 2 percent to $20.19 billion.
The results came a day after rival Colgate-Palmolive Co’s quarterly profit met analysts’ expectations, with sales that rose slightly more than Wall Street expected.
P&G said it now expects core earnings per share of $3.82 to $3.88 this year, on sales growth of 4 percent. Back in February, it had forecast $3.93 to $4.03 for the year ending in June.
Analysts were expecting full-year profit of $3.96 per share.
P&G expects to earn 79 cents to 85 cents per share in the current quarter. It forecasts 1 percent to 2 percent sales growth and said organic sales, which strip out the impact of deals and currency, should rise 4 percent to 5 percent.
P&G outlined its restructuring plan in February.
Reporting by Jessica Wohl in Chicago and Martinne Geller in New York; Editing by Lisa Von Ahn and Bernadette Baum