Procter & Gamble sales drop due to stronger dollar
Consumer goods major Procter & Gamble has reported slight decline in its third-quarter revenue. The company’s revenue did not meet expectations of analysts after the dollar affected its overseas sales adversely. The company said in a statement on Thursday that its revenue dropped 7.6% to $18.1 billion. According to data compiled by Bloomberg, analysts estimated $18.4 billion of revenue. The company is the world’s largest consumer-products maker.
Most of its sales outside North America contribute a lot to its performance and therefore, it is particularly sensitive towards currency fluctuations. According to the company, foreign exchange affected the sales by 8 percentage points in the quarter and will also cut revenue for the year by up to 7 percentage points.
According to Chief Executive Officer A G Lafley, P&G will continue to work in an attempt to cut costs to deal with the currency fluctuations. Lafley said in the statement that they will make up for foreign exchange over time by using a combination of pricing, mix enhancement and cost reduction, as they did earlier.
After the announcement regarding earnings, Procter & Gamble CFO Jon Moeller said that hedging could not be the solution for making up shortfalls due to currency fluctuations.
Moeller said, "You need to solve it operationally. It's [also] just straightforward productivity savings. We had 410 basis points of productivity savings in the quarter. And you need them at a time like this".
According to P&G, profit of the company not including some items was 92 cents a share, same as the average of analysts’ estimates compiled by Bloomberg. Shares of P&G dropped 0.8% to $82.5 during early trading in New York.
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