P&G’s Forecast Dims Consumer Goods Sector (PG, JNJ, CL, KMB)

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Consumer goods giant Procter & Gamble Co. (NYSE: PG) reported third fiscal quarter results this morning that were about in-line with expectations, but the company’s lowered full-year forecast is pushing shares down. Johnson & Johnson (NYSE: JNJ), Colgate-Palmolive Co. (NYSE: CL), and Kimberly-Clark Corp. (NYSE: KMB) are also feeling the effects of P&G’s diminished outlook.

First, the good news. P&G reported adjusted EPS of $0.94, a penny better than the consensus estimate of $0.93. Revenue came in a $20.19 billion, about -5% lower than the estimate of $20.29 billion. The company blamed the lower revenues on a government price cap in Venezuela and lower sales in some developed markets.

For its fiscal fourth quarter ending in June, P&G forecast adjusted EPS of $0.79-$0.85, compared with the current consensus estimate of $0.93. For the full 2012 fiscal year, P&G now forecasts EPS of $3.82-$3.88, well below the current consensus estimate of $3.98.

Here’s another problem that hit P&G in the third quarter: “The benefits from sales growth and cost savings were offset by higher commodity costs.” P&G’s gross margins for the quarter were down -1.5% partly because the company was unable to pass along higher costs to customers. Kimberly-Clark was able to raise prices, but when P&G tried the same thing, competitors refused to follow and the company had to reduce prices to old levels.

P&G’s shares are down -3.2% in late morning trading at $64.74 in a 52-week range of $57.56-$67.95.

Paul Ausick