By Paul Ziobro
Procter & Gamble Co. will report its fiscal first-quarter
earnings before the market opens Friday. Here's what you need to
know:
EARNINGS FORECAST: Profit of $1.07 a share is the average of
analysts surveyed by Thomson Reuters, compared with earnings of
$1.04 a year ago.
REVENUE FORECAST: Revenue of $20.83 billion is forecast,
compared with $21.20 billion a year earlier, according to Thomson
Reuters.
WHAT TO WATCH:
GROSS MARGINS: P&G's gross margin has declined for five
straight quarters, and some analysts think it is set to contract
again. This comes even as the company is in the midst of a
multiyear, $10 billion restructuring program that is saving money
by cutting jobs, reducing raw material expenses and improving
supply chain efficiency. The problem has been that P&G is
selling more products in emerging markets, where margins are lower,
and growth has stagnated in developed markets, where margins are
higher.
BRAND CULLING: P&G wants to get better by being smaller. In
August, Chief Executive A.G. Lafley announced plans to sell more
than half of the brands in company's stable, shifting its focus its
biggest, most profitable 70 to 80 properties. Investors are eager
to hear about any progress during the quarterly report though most
of the shedding will occur over the next two years. Some lesser
known brands like Nanfu, a battery sold in China, and Puma perfume
have already been sold.
SUCCESSION PLANNING: One of Mr. Lafley's main jobs when he
returned as CEO last year was to put in place a succession process
to replace him in the corner office. As such, investors will want
to hear about any steps taken to identify potential candidates.
Some machinations are already in motion. This week, P&G
announced Melanie Healey, head of its North America business and
once considered a potential successor to Mr. Lafley, is leaving the
company next year. Meanwhile, Jeff Schomburger, who has led
P&G's business with Wal-Mart Stores Inc. since 2005, will
become global sales officer.
Write to Paul Ziobro at paul.ziobro@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires