Procter & Gamble Co., facing a proxy fight with activist investor Nelson Peltz, posted higher profit in the most recent quarter despite a slump in consumer spending on staples from diapers to toothpaste.
Without once mentioning the scuffle with Mr. Peltz, who is trying to win a seat on the company's board, P&G executives laid out a clear road map to their case against making him a director.
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In a call with reporters, finance chief Jon Moeller called the results "fantastic." Chief Executive Officer David Taylor said the company is making progress and focused on long-term goals. "We just need to stay focused, not get distracted and go hard on this path," Mr. Taylor said.
On a call with analysts, Mr. Taylor detailed efforts under way to invest in key markets and products and how the company is changing its management and bonus structure to speed progress and encourage "appropriate risk taking."
P&G said organic sales increased 2% for the quarter and full year ended June 30. The closely watched metric, which strips out currency moves, acquisitions and divestitures, remains well below prerecession levels and lags behind some rivals. P&G forecast growth of 2% to 3% next year.
The consumer-products giant, whose brands include Bounty, Crest, Tide and Pampers, said it made progress this year in efforts to lift sluggish sales of its top brands as it fends off calls to continue trimming its product portfolio. "We have prioritized the long-term health of the company," Mr. Taylor said.
P&G shares rose 2.5% to $91.20 in premarket trading. Shares of P&G are up 6% this year compared with the S&P 500's 11% rise.
Mr. Peltz's Trian Fund Management is arguing that P&G remains bogged down by bureaucracy and failed to capitalize on a recently completed five-year, $10 billion cost-cutting plan. P&G last year launched a second $10 billion savings plan and Mr. Peltz said giving him a seat on the board will help ensure that money is well-spent.
Trian, following Thursday's earnings release, said P&G "needs to address the root causes of this consistent underperformance, including deteriorating market share across most of its categories and excessive cost and bureaucracy."
On Thursday, Mr. Taylor said men's razors in the U.S. and diapers in China will be two major areas of focus as P&G, which has dropped hundreds of brands in recent years, looks to use its smaller size to win back share in key markets. Mr. Taylor said that turning around the Gillette razor brand, which has ceded market share in recent years to cheaper online upstarts, is P&G's biggest challenge.
In the final quarter of the company's fiscal year, P&G reported a profit of $2.2 billion, or 82 cents a share, compared with $1.96 billion, or 69 cents a share, a year ago.
Total revenue dipped 0.1% in the quarter to $16.07 billion, and slipped 0.4% in the full year. The revenue figures were depressed by currency swings, since P&G generates much of its sales outside the U.S.
Analysts polled by Thomson Reuters had expected earnings of 78 cents a share on $16 billion.
Organic sales of beauty products and fabric and home-care products both rose 5% in the quarter. Still, concerns remain about the company's grooming and health-care lines, where organic sales fell 1% each. Customers have increasingly turned to online sellers for things such as razors and over-the-counter medications.
The company did see pockets of growth in certain products, including Always Discreet incontinence underwear and power toothbrushes.
P&G fared better than some rivals in the most recent quarter. Colgate-Palmolive Co.'s organic sales for the quarter were flat and Kimberly-Clark saw a 1% decline. Unilever PLC reported a 3% organic sales increase, a decline from 4.7% growth a year ago.
One analyst questioned whether heavy discounting by P&G is in part responsible for the sluggish market. "You are taking prices down more and raising prices less than competitors," Bernstein analyst Ali Dibaj asked on the call with executives.
P&G's Mr. Moeller said discounting by retailers has contributed to lower pricing on consumer goods. "The ultimate price consumers pay is at the discretion of retail partners and that's at their sole discretion," he said.
--Cara Lombardo contributed to this article.
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(END) Dow Jones Newswires
July 27, 2017 10:53 ET (14:53 GMT)