Procter & Gamble Co. (NYSE:PG) posted fourth quarter earnings that beat market forecasts as it slashed costs to offset recent sluggish sales.
The maker of Gillette razors and Pampers diapers achieved a 19% increase in diluted earnings per share (EPS) to 82 cents compared to the same period a year ago. Core EPS was 85 cents, up 5% on the previous year, beating expectations of 78 cents.
Sales remained flat at US$16.1bn, including a negative two percentage point impact from foreign exchange. Excluding foreign exchange headwinds, organic sales grew 2%, driven by products in beauty, fabric and home care.
“We met or exceeded each of our going-in objectives for fiscal year 2017 in a challenging macro and competitive environment,” said chief executive David Taylor.
But major shareholder Train Fund Management, owned by billionaire hedge fund manager Nelson Peltz, issued a letter lambasting the company’s first half performance.
“Over the past 10 years, P&G's total return to shareholders is less than half that of its peers and it has been in the bottom quartile over most recent time frames," Trian, which owns about US$3.3bn worth of shares in P&G, said in a statement.
"Trian believes P&G needs to address the root causes of this consistent underperformance, including deteriorating market share across most of its categories and excessive cost and bureaucracy."
Peltz is seeking a position on the board at P&G, saying he wants to ensure "management accountability”, but the company has so far rejected his request for one.
P&G said it expects core EPS to rise 5% to 7% in 2018 compared to US$3.92 in 2017 as costs savings are set to build through the year.
However, it warned that the first quarter will be the "lowest organic sales and core EPS growth period of the year” due to a recent reduction in Gillette prices across the US and headwinds from “portfolio choices”.