P&G Earnings: What to Watch

By Sharon Terlep

Procter & Gamble Co. is scheduled to report earnings for the quarter ended Jan. 23 before the market opens Tuesday. Here's what you need to know.

EARNINGS FORECAST: Analysts expect P&G to report "core" earnings of $1.14 cents a share, according to Thomson Reuters. That compares with core earnings of $1.08 cents a share a year earlier. Core earnings strips out currency moves and acquisitions and divestitures.

SALES FORECAST: Net sales are expected to rise to $17.39 billion from $16.85 billion a year earlier. Barclays estimates 1.9% organic sales growth, which also excludes currency moves and acquisitions and divestitures.

WHAT TO WATCH:

CONSUMER SPENDING: A buoyant stock market and strengthening economy appear to be little help to makers of household goods, who spent 2017 struggling with lackluster sales. Look for P&G to give some color on shopper behavior and whether spending is expected to pick up on everything from diapers to razors. P&G and rival Kimberly-Clark Corp., which also reports results on Tuesday, are the first big consumer-products companies to release the latest results.

TAX CHANGES: Wall Street will be looking for details on how the tax overhaul will factor into P&G's balance sheet and long-term planning. P&G's effective tax rate last quarter was 23.4%, slightly above the new 21% corporate rate. The company also stands to benefit from a provision that allows spending on capital projects to be written off immediately.

MARKET SHARE: Analysts and rival consumer-products makers have pointed to price cuts by P&G as one of the factors behind the industrywide sales slump. As the biggest player, P&G has the clout to affect pricing and demand across the industry. P&G took the unusual step early last year of reducing prices on high-margin Gillette razors by up to 20%, and has made reductions elsewhere. Wall Street will look to P&G's results to see how much price reductions played into any market share gains.

PODS FALLOUT: P&G has been struggling to quash an internet meme in which teens bite into Tide Pods laundry packets. The company opted not to speak up about the troublesome game when it learned of it years ago, but took action once videos of the behavior began going viral online. The company is eager for buzz to die down around the so-called Tide Pod challenge, but may face questions from analysts.

(END) Dow Jones Newswires

January 22, 2018 15:56 ET (20:56 GMT)

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