By Devika Krishna Kumar
REUTERS - Procter & Gamble Co, the world's largest household products maker, reported a better-than-expected quarterly profit as its cost cutting efforts paid off and organic sales rose in its home care business.
The maker of Pampers diapers and Tide detergent said it expects organic sales and core earnings to rise for the full year started July, sending the company's shares up more than 3 percent in early trading.
P&G said it would streamline its business and focus on about 70 to 80 "core" brands that are industry leaders and partner, discontinue, or divest the rest of its 90 to 100 brands.
Still, the company's net sales in the fourth quarter ended June 30 missed Wall Street's expectations and analysts were not satisfied with the "quality" of P&G's results.
"PG's earnings quality is below its potential," BMO Capital Markets analysts wrote in a note.
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While total organic sales, which excludes the impact of divestitures and acquisitions, rose 2 percent in the quarter ended June 30, currency headwinds wiped out the gains. Total net sales fell 1 percent.
P&G's revenue has been hit by economic challenges, a strong dollar, "choppy" growth in developed markets and tough competition, Chief Financial Officer Jon Moeller said on a conference call.
"It is hard to determine true direction in these markets."
MIXED RESULTS
A 7 percent fall in operating expenses helped P&G post core earnings of 95 cents per share, which beat the average analyst estimate of 91 cents, according to Thomson Reuters I/B/E/S.
"Procter & Gamble's fiscal 4Q results were mixed, as a better than expected core EPS was driven largely by non-operating items and tax," Oppenheimer & Co analyst Joseph Altobello in a research note.
The company has sought to cut expenses by streamlining management, lowering overhead and marketing costs, and cutting jobs under a five-year, $10 billion restructuring plan announced in February 2012.
Net profit attributable to the company rose 37 percent to $2.58 billion, or 89 cents per share, in the quarter.
Net sales fell 1 percent to $20.16 billion, missing the average analyst estimate of $20.48 billion.
Organic sales rose 1 percent in P&G's largest business, fabric care and home care, which sells products such as Febreze air freshener and Duracell batteries.
Organic sales rose 3 percent in the baby, feminine and family care business, which includes brands like Always, Bounty and Charmin.
P&G said it expects full-year organic sales to rise in the low- to mid-single digit percentage range, and core earnings to rise in the mid-single digit percentage range.
However, while the company warned it expects currency fluctuations to hurt the current quarter the most, they would be roughly neutral to earnings growth in the second half of 2015.
P&G's shares were up 3.2 percent at $79.81 in early trading on Friday.
(Editing by Savio D'Souza)