Procter & Gamble Cuts Guidance, Citing Currency Fluctuations
Procter & Gamble (NYSE:PG), the world’s largest consumer-products maker, lowered its sales and forecast for the year Tuesday, citing currency exchange-rate fluctuations and policy changes in Venezuela. According to Reuters, the recent devaluation against the dollar of the Argentine peso, Turkish lira, South African rand, Russian ruble, Ukrainian hryvnia, Brazilian real, and several other currencies has significantly affected P&G’s business in developing countries because the devaluations cause the company’s earnings in those currencies to be worth less when converted back to dollars.
Now, P&G expects to realize a growth in core earnings per share of 3 percent to 5 percent, while its previous outlook reflected a growth of 5 to 7 percent. The Cincinnati, Ohio-based company also revised its forecast for sales growth to a range of flat to a rise of 2 percent versus its prior forecast for growth in a range of 1 to 2 percent.
P&G shares dipped 0.5 percent to $78.45 Tuesday in extended trading following the company’s announcement after having slid 3.2 percent this year through the close of regular trading. Last month, the consumer goods company reported its latest earnings and said it expected “no further currency weakness within our guidance range,” even as markets were experiencing the affects of economic instability and the Federal Reserve’s tapering of monetary stimulus, but it was clear to investors Tuesday that those P&G promises might not exactly hold, and shares were still trading down Wednesday.