P&G Lowers Sales And Profit Guidance On Currency Translation Woes

Mar 5 2014, 1:25pm CST | by

P&G Lowers Sales And Profit Guidance On Currency Translation Woes
Photo Credit: Forbes Business

Procter & Gamble recently lowered its guidance for sales and earnings growth for FY 2014 (fiscal year ends in June) due to unfavorable exchange rate movements in many developing economies and policy changes by the Venezuelan government. The world’s leading consumer goods company expects currency translation effects to reduce all-in sales (accounting for the impact of currency movements) by 2%-3%. However, it maintained its guidance of 3%-4% growth for organic sales (excludes the impact of foreign currency movements). Consequently, all-in sales are now expected to register up to 2% growth compared to the initial forecast of 1%-2% growth.

P&G expects the currency movement to also negatively impact core earnings per share growth. Core earnings include the effect of foreign exchange movements but exclude the impact of certain one-time charges. The company forecasts core earnings per share to grow in the range of 3%-5%, lower than its initial guidance of 5%-7% growth.
/>

Lately, many developing countries such as Brazil, Russia, South Africa, Argentina and Turkey have witnessed their currencies depreciate relative to the US dollar. This has negatively weighed on the income statements and balance sheets of many American firms that have significant operations outside of the U.S. The currency devaluation has also created inflationary pressures on many markets, because of which buyers have reduced their consumption.

Towards the end of 2013, Unilever’s CEO, Paul Polman, announced at the World Wildlife Fund Duke of Edinburgh Conservation Awards that this slowdown in emerging economies will stay for a long period. P&G derives about 40% of its revenues from emerging markets, lower than its close rivals Unilever and Colgate-Palmolive. However, the company is now looking to enhance its presence in these markets as they continue to grow faster than developed economies. We believe that a prolonged slowdown could hamper P&G’s expansion plans, and consequently its growth trajectory.

Our price estimate of $70 for Procter & Gamble’s stock marks our valuation at a discount of about 10% to the current market price.

See More at Trefis | View Interactive Bernstein Research (Powered by Trefis)

Like our charts? Embed them in your own posts using the Trefis WordPress Plugin.

Source: Forbes Business

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Mali confirms two new Ebola cases
Bamako, Nov 25 (IANS) Mali has confirmed two new Ebola cases after the death of five people due to the virus, the country's public health ministry has said.
 
 
Toddlers remember good times for life
New York, Nov 25 (IANS) According to researchers from the Utah-based Brigham Young University, babies are more likely to remember an incident if there is a positive emotion or affect that accompanies it.
 
 
Garlic, broccoli may speed up cancer recovery
London, Nov 25 (IANS) Researchers from the University of Copenhagen have found that selenium - naturally found in garlic and broccoli - slows down immune over-response, improving treatment against cancers such as melanoma and prostate cancer.
 
 
Protein 'switch' to turn off Alzheimer's identified
Washington, Nov 25 (IANS) Blocking a protein that acts like switch to wake us up may help prevent Alzheimer's disease, new research has found, pointing towards a new target to prevent this devastating brain disorder.
 
 
 

Latest from the Network

Christian Bale jealous of Ben Affleck?
Los Angles, Nov 25 (IANS) Actor Christian Bale, who is best known for portraying Batman in "The Dark Knight" trilogy, says he felt jealous when he saw actor Ben Affleck taking over the character in his upcoming film "...
Read more on Celebrity Balla
 
Zayn Malik wants to quit One Direction?
Los Angeles, Nov 25 (IANS) English pop band One Direction's member Zayn Malik is reportedly ready to give up his glamorous lifestyle for a quieter life with his fiancee Perrie Edwards. The 21-year-old is said to be...
Read more on Celebrity Balla
 
Black Friday 2014 Sales You Can Shop Now
While most Black Friday ads said that Black Friday 2014 sales start on Thanksgiving Day, we already seeing a dozen Black Friday sales that you can shop now. The first Black Friday 2014 sales have launched already on...
Read more on Black Friday Countdown
 
Modi arrives in Nepal for Saarc summit
Kathmandu, Nov 25 (IANS) Indian Prime Minister Modi arrived Kathmandu Tuesday afternoon in a special Indian Air Force aircraft to attend the 18th Saarc Summit Nov 26-27. He was escorted by three other aircraft while...
Read more on Politics Balla
 
I'm good with diapers: Ryan Reynolds
Los Angeles, Nov 25 (IANS) Actor Ryan Reynolds, who is awaiting the birth of a baby from wife Blake Lively, says he is "good" at changing diapers. The 38-year-old and Lively are expecting their first child together...
Read more on Celebrity Balla
 
David Beckham happy to have Victoria as wife
Los Angeles, Nov 25 (IANS) Former footballer David Beckham is proud to have a wife as caring as Victoria Beckham, who "really understood" him when he injured his ankle and couldn't play in the 2010 World Cup tournament...
Read more on Celebrity Balla
 
When Emily Blunt made her husband cry
Los Angeles, Nov 25 (IANS) Actress Emily Blunt says her husband John Krasinski got emotional while watching her in forthcoming film "Into The Woods". The 31-year-old says her he ended up crying while watching her in...
Read more on Celebrity Balla
 
Robert Downey Jr's dad proud of him for beating drug addiction
Robert Downey Jr's father is more proud of him for beating his drug addiction rather than his acting success. Robert Downey Sr's achievements are to be celebrated by his 'Iron Man' star son and 'Inherent Vice' director...
Read more on Movie Balla
 
Oscar Isaac to star in X-Men
Oscar Isaac is to star as the main villain in 'X-Men Apocalypse'. The 35-year-old actor has been cast by Bryan Singer in the superhero sequel - the follow-up to 'X-Men: Days of Future Past' - as a new powerful mutant...
Read more on Movie Balla
 
China's swimming body backs Sun Yang
Beijing, Nov 25 (IANS) The Chinese Swimming Association (CSA) Tuesday said that it believed tainted swimmer Sun Yang is innocent although he failed a dope test in May and was consequently banned for three months. The...
Read more on Sport Balla