Wednesday, June 20, 2018
Business

Procter & Gamble cites European uncertainty in lowering forecast

NEW YORK — Procter & Gamble on Wednesday lowered its fourth-quarter earnings and revenue forecasts, the latest company to sound warning bells about slowing global economic growth.

The world's largest consumer products company said it expects adjusted fourth-quarter earnings between 75 and 79 cents per share, down from its previous estimate of 79 to 85 cents.

Revenue is anticipated to drop 1 percent to 2 percent compared with a prior outlook for a 1 percent to 2 percent increase. The new guidance implies revenue in a range of $20.45 billion to $20.66 billion.

P&G, which makes an array of everyday goods ranging from Tide detergent to Gillette razors, said it is cutting the forecast because of unfavorable foreign exchange rates, continued slow growth in developed markets and a slowdown of growth in China.

Many U.S. companies have looked to emerging markets as economic growth in North America and Europe has slowed. But P&G's and others' warnings show that expanding abroad is a complicated task for even the largest companies.

Earlier this month, McDonald's said economic volatility, particularly in Asia, is pressuring its second-quarter results. Package delivery company FedEx on Tuesday said the slowing global economy is expected to crimp its growth over the next 12 months. Its rival UPS in April similarly said slowing Asian shipments hurt quarterly results.

"Global growth is slower than anticipated," said John Lonski, Moody's chief economist. "And though it's a stretch to predict the imminence of a global recession, the worldwide slowdown has been great enough to prompt downward revisions of revenue forecasts by multinational corporations."

P&G's cut, announced at a presentation at a Deutsche Bank Global Consumer conference in Paris, is its second in three months. The company is trying to balance growth in emerging markets, which make up about 30 percent of its sales, with the realities of an uncertain global economy and its own executional problems that have led to lackluster market share growth.

Last month P&G said it was rethinking overseas expansion and would focus on its biggest and most profitable markets abroad.

On Wednesday, CEO Bob McDonald reiterated that strategy as well as the company's cost-cutting program, aimed at saving $10 billion by fiscal 2016.

"We are making the necessary adjustments to our growth strategy to increase focus on our core business and to achieve more balanced growth across geographies, product categories and the top and bottom lines," he said in a statement accompanying the presentation.

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