P&G Q4 expected to underline the contrast between emerging and developed markets

By Simon Pitman

- Last updated on GMT

Related tags Revenue Procter & gamble

Ahead of Procter & Gamble’s fourth quarter results, out tomorrow, analysts believe that the overall performance will be strong, driven by emerging markets, but developed markets will be weak.

The general consensus from market analysts is that Procter & Gamble will be posting healthy sales gains on the back of strong sales growth in key developing markets such as Brazil and Colombian in Latin America, as well as India and China in the Asia Pacific region.

Analysts polled by Thomson Reuters believe that these gains are likely to see fourth quarter revenues grow by approximately 9 per cent to reach $20.6bn, compared to $18.9bn in the corresponding period last year.

A good buy for investors, despite developing markets struggling

Independent ratings agency The Street, says that the company is firing on all cylinders and recommends investors to buy up company shares.

It attributes this rating to the fact that strengths currently override weaknesses, giving the company a better performance outlook. It highlights the company’s strengths as revenue growth, growth in earnings per share, increase in net income and expanding profit margins.

However, despite the global results looking strong, Procter & Gamble CEO Robert McDonald recently underlined his belief that the future remains challenging for the company in its developing markets.

The US market is 'soft'

Speaking to the media at a conference in Singapore yesterday, McDonald stressed particular concerns about the soft condition of the US market, while reiterating that sales in North America, Europe and Japan have been flat for the last two reported quarters.

For the third quarter results, which were announced in April, the company underlined the fact that sales growth was well ahead of the industry average, but also stressed the fact that rising costs were holding back profits.

Net sales for the third quarter increased by 5.0 percent to $20.2bn, which the company said was largely attributable to a 5.0 percent growth in sales volumes, derived from all six of the company’s business segments.

Organic sales up on acquisitions and currency exchange

Organic sales were up 4 percent, reflecting a slight negative impact from acquisitions, divestures and foreign currency exchange. The company also pointed out that negative geographic and product mix impacted the results by approximately 2 percent.

Market share was up in all geographic regions, while 18 of its 24 major brands and 14 of the top 17 countries reported flat or higher market share.

At the time the third quarter results were released the company said it was slightly lowering its upper end forecast for earnings per share and organic sales, stating that rising commodity prices were likely to undermine the performance.

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