Procter & Gamble Earnings: What to Watch

By Sharon Terlep

Procter & Gamble Co., the world's largest maker of household and personal-care products, is scheduled to release earnings for the quarter ended Dec. 31 before the market opens Friday. Here's what you need to know:

EARNINGS FORECAST: Analysts polled by Thomson Reuters expect P&G to report $1.06 a share in "core" earnings, which excludes items such as restructuring costs, compared with core earnings of $1.04 a share a year earlier.

SALES FORECAST: Analysts expect net sales of $16.79 billion for the quarter, a small drop from $16.92 billion a year earlier.

WHAT TO WATCH:

ORGANIC SALES: P&G has shown it is able to cut costs but has yet to deliver on a promise to meaningfully increase revenue. Investors will look for P&G to post improved organic-sales growth, a measure that strips out currency moves, acquisitions and divestments. Last quarter, the company posted an unexpected jump in profit and its biggest increase in organic sales -- 3% -- in more than a year. But the company said not to expect another dramatic increase right away, and falling short of the cautious forecast would likely deal a further blow to P&G's stock price, which is down nearly 3% since the company's last earnings announcement.

BEAUTY BUSINESS: This will be P&G's first quarterly results since the company unloaded the bulk of its beauty business to Coty Inc. P&G's beauty brands, including CoverGirl makeup and Clairol hair dye, were sucking resources while returning little in the way of profit or growth for the company. The $11.4 billion deal closed last fall, shrinking P&G by more than 10,000 employees and 40 brands. Investors will get their first look at how P&G fares without those ailing brands, and will gain insight into the performance of the remaining beauty names, such as Olay facial moisturizers and Pantene shampoo.

CURRENCY: Currency volatility hasn't let up, much to the detriment of the world's big multinational corporations. P&G and its rivals for many quarters have felt the effect of the strong dollar on financial results. In a report earlier this month, Bernstein analysts said 37 of the 40 currencies the firm regularly tracks have weakened in value since Oct. 15. Wall Street will look to what P&G has to say on overseas currency woes, particularly since about two-thirds of the company's sales are outside the U.S.

INDUSTRY HEALTH: P&G is the first of among its consumer-products peers, which include Unilever NV, Colgate-Palmolive Co. and Kimberly Clark Corp., to announce results this earnings season. Wall Street will look for an indication of how the overall industry is expected to fare in 2017 based on P&G's take on consumer sentiment, pricing of products and other economic factors. P&G is rarely the first of the major consumer-products companies to report results but opted to release its earnings figures a week earlier than usual for the most recent quarter.

(END) Dow Jones Newswires

January 19, 2017 12:14 ET (17:14 GMT)

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