Procter & Gamble announces second-quarter results

CINCINNATI — Procter & Gamble announced on Friday that second-quarter net sales and organic sales rose 4% as net earnings dropped 49%.

“We continue to make progress against our key business priorities in the difficult macroeconomic environment,” stated chairman, president and CEO Bob McDonald. “We delivered solid top-line growth and continued to accelerate productivity improvements to drive down costs. With the easing of commodity cost comparisons over the next two quarters, continued solid top-line growth and cost savings progress, we expect operating profit growth to accelerate in the second half of the fiscal year.”

Net sales for the October to December quarter rose 4% to $22.1 billion.

Net earnings totaled $1.71 billion, or 57 cents per diluted share, compared with $3.36 billion, or $1.11 diluted earnings per share, in the year-ago period.

In beauty, net sales rose 1% to $5.4 billion, as organic sales grew 2%. In grooming, net sales rose 1% to $2.2 billion, as organic sales were up 2%.

As part of its effort to improve productivity, the company stated during the conference call with analysts that it is cutting about 1,600 positions by the end of the fiscal year.

“We'll achieve this objective through the combination of selective hiring, normal attrition and our restructuring efforts. The reductions this year should yield annual savings of around $240 million before tax. Our efforts to reduce costs in nonmanufacturing portions of the organization will go beyond this fiscal year,” Jon Moeller, P&G CFO, told analysts.

In addition, the company is consolidating its supply-planning activities into central hubs, including one recently opened in Cincinnati. It also has inked an outsourcing arrangement for U.S. in-store detailing work and believes the efforts will improve speed and agility and improve supply chain efficiency while reducing costs.

It also is reducing the number of technical centers it operates globally and opening new technical centers in developing markets, such as the new facility being built in Singapore and the expansion of its research and development center in Beijing.