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P&G Says 2001 Earnings Will Match Forecasts

September 29, 2000|From Bloomberg News

Consumer products giant Procter & Gamble Co. on Thursday gave its investors some good news, for a change: The company said its fiscal 2001 earnings will be at the "upper end" of analysts' forecasts.

The announcement drove P&G's shares (ticker symbol: PG) up $5.19 to close at $66.94 and helped stoke Wall Street's rally.

P&G, maker of Tide detergent, Crest toothpaste and many other household products, has been struggling for much of this year, warning three times in the last seven months that it would miss Wall Street's forecasts.

But new Chief Executive Alan G. Lafley said Thursday that the company now expects earnings in fiscal 2001, which ends in June, to rise between 7% and 10%, to between $3.16 and $3.25 a share.

The average analyst forecast had been about $3.18 a share.

Longer term, "We believe that double-digit earnings-per-share growth should be achievable year to year," Lafley said in his first presentation to investors as CEO.

With the stock down nearly 40% this year, many investors had been expecting another warning from P&G this quarter, analysts said.

But Lafley has vowed to cut costs and boost sales of top-selling products such as Pampers, which have been losing sales to rivals such as Kimberly-Clark Corp., maker of Huggies.

He also has lowered the company's goals for long-term increases in sales and profit from those set in June 1999 by former CEO Durk Jager. Analysts said Jager's previous forecasts were unrealistic. The new ones gave them more confidence in the company's ability to meet its targets.

Procter & Gamble wants to regularly achieve 10% profit gains and sales gains of 4% to 6%, Lafley said.

"His No. 1 job was to convince Wall Street that the company is back on track," said Marvin Roffman, president of Roffman Miller Associates, a P&G shareholder. "It's a very good start."

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