2nd UPDATE: P&G 4Q Sales Up 5%, 1Q View Cautious

Procter & Gamble Co.'s (PG) fiscal fourth-quarter sales jumped nearly 5% as the consumer giant launched new offerings and promoted its brands more heavily, but the lower prices nicked results and sales grew less than the company had projected.

P&G, which had focused on high-end products before the recession, has pushed harder to introduce more offerings that appeal to cost conscious consumers. It has offered more price promotions on some of its brands, and launched new products around the world to grab market share from competitors. Those promotions and the heavy investment in marketing helped push volumes up sharply, although the price adjustment lowered sales by one percentage point. The U.S. dollar strengthened more than expected in the quarter, contributing to the miss in sales projections.

P&G shares fell 2.7% premarket to $60.39.

The company's profit in the quarter dropped 12%, reflecting earnings from discontinued operations in the prior-year period as well as the heavy investments in marketing.

P&G's results reflect the tightrope that consumer companies have had to walk as they balance market share growth and profits. Big brands and retailers have offered more discounts on everyday goods, but consumers have remained cautious in their spending on daily necessities. Several food and household good companies - including Colgate-Palmolive Co. (CL) - have in recent weeks reported disappointing sales due to slow growth in developed markets.

The Tide and Pampers maker projected first-quarter earnings of 97 cents to $1.01 a share, with total sales up 1% to 3%. Analysts' average estimates, according to Thomson Reuters, were earnings of $1.04 and revenue rising 2% to $20.26 billion.

For the year, P&G anticipates a profit of $3.91 to $4.01 with revenue up 2% to 4%. Analysts expected $3.98 and 3% growth, respectively.

On a conference call with reporters Chief Executive Bob McDonald said the company is "basically where we want to be in terms of prices." But P&G may still make some "discreet price corrections" on brands like Downy in North America, he said.

While developing markets outperformed, developed markets grew only 1% in the latest quarter, he said, adding that he doesn't expect that trend to change soon.

For the quarter ended June 30, P&G reported a profit of $2.19 billion, or 71 cents a share, compared with $2.47 billion, or 80 cents a share a year earlier. Revenue rose 4.7% to $18.93 billion. The company in April had projected earnings of 68 cents to 74 cents and sales rising 6% to 7%.

Organic sales, a closely watched measure that excludes acquisitions and foreign exchange, rose 4%, the low end of the company's forecast. Volume grew 8% after the prior year's weakness, the biggest gain in a long string of quarters. Gross margin to 49.5% from 49%.

-By Anjali Cordeiro, Dow Jones Newswires; 212-416-2200; anjali.cordeiro@dowjones.com

(Kevin Kingsbury contributed to this article.)

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