Harries’ pick Procter & Gamble posts 49% profit fall

27 January 2012 | By Gary Jackson

Net earnings for the three months to December amounted to $1.69 billion (£1.08 billion), the consumer products company’s latest financial results show. This is 49% down on the $3.33 billion profit posted one year before.

The company reported a $1.5 billion non-cash impairment charge that it took to adjust the value of goodwill in appliances business Gillette and haircare firm Wella. The adjustments were made to reflect the businesses’ downgraded sales, earnings and profit forecasts.

“The impairments were primarily driven by the prolonged deterioration of the macroeconomic environment, the more discretionary nature of the products and increasing levels of competitive activity,” according to Procter & Gamble.

“Together, these factors have led to a reduction in expected market size and growth rates for both businesses.”

It also said this is “particularly the case” in western Europe, where about half of the company’s appliances and professional salon sales are made.

Procter & Gamble lowered its earnings forecast for the current financial year, citing currency volatility and the strong dollar. The firm now expects earnings per share of $4.00 to $4.10, down from its previous estimate of $4.15 to $4.33.

The stock is found in the top-ten holdings of Harries’ £2.2 billion Newton Global Higher Income fund, where it makes up 2.11% of the portfolio. It is also owned by Aled Smith’s £1.2 billion M&G American fund and Thomas Luddy and Susan Bao’s £689.7m JPM US Select 130/30 fund.

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