CINCINNATI – P&G says currency rate changes in Venezuela, Argentina and other developing countries are hurting its profitability.
The world’s largest consumer product maker cut its earnings outlook for the year. It expects that earnings will grow 3 to 5 per cent, excluding one-time items, rather than its prior forecast of 5 to 7 per cent. It still expects revenue to rise 3 to 4 per cent when stripping out the effect of acquisitions and foreign exchange rates.
Procter & Gamble Co., like other consumer products makers, has turned to emerging markets to increase its sales amid slow growth in developed markets. Developing countries now account for about half of P&G’s revenue, but the growth rate there is now slowing too.
The maker of products including Tide detergent and Crest toothpaste said in its most recent quarterly report that it sales were in line with trends in the overall consumer market industry, which had flat to 1 per cent growth in developed markets and was up 7 to 8 per cent in developing markets.
Hurting its outlook for the year is a change in government policy in Venezuela related to foreign currency rates and the recent slump in currency values in Argentina, Turkey, South Africa and other developing countries.
Shares closed up 81 cents at $78.84 on Tuesday. The stock is down 3 per cent since the beginning of the year.