P&G outlook points the way to another rough ride

By Simon Pitman

- Last updated on GMT

Related tags: Economics, Us

Procter & Gamble, the world’s biggest consumer goods company, posted results below market expectations yesterday and put nerves further on edge by predicting that growth would slow in the next two quarters.

The forecast gives further credence to a growing number of claims by financial experts that the global economy could be heading into a double-dip recession, which means that, following several quarters of growth, economic activity could take another nose dive.

Although the financial world remains divided over the prospect of a double-dip recession, former chairman of US Federal Reserve, Allan Greenspan, commented in a press interview this week that this may become a reality in the US if already precarious property prices plunge.

Likewise, economic activity will be determined by consumer spend patterns, but with unemployment only edging down slightly in most developed nations worldwide, including the US, the prospect of consumer spend rising alongside a jittery world economy looks unlikely.

P&G boss believes future looks shaky

Although P&G CEO Bob McDonald said he believes that the US would not experience a double-dip recession, he did tell Wall Street analysts that he believed the market would be hard to predict, during a news conference yesterday.

“I think the economic recovery in the US will be uneven … we are seeing that already,”​ he said.

Although the company did see a return to growth for the quarter ending in June and sales were up 5 percent from $18.08bn to $18.92bn, while full year sales were up 3 percent to $78.93b

Sales gains eaten away by higher costs

However, significant increases in costs during the fourth quarter were reflected in a big fall in net earnings from $2.47bn to $2.18bn, while for the full year earnings fell by 5 percent to $12.73bn.

The fact that sales gains came from a comparison to one of the company’s worst quarterly performances in decades put a further dampener on the results.

Although prospects for stronger results look far better in the developing markets, the company also said that it expected gains during the financial year ahead are likely to be counterbalanced by unfavourable currency translations.

Related topics: Business & Financial

Related news

Show more

Follow us

Featured Events

View more

Products

View more

Webinars