P&G reported $20.2 billion in second quarter fiscal 2015 revenue, a 4% slide compared to the prior-year period and a figure that missed the $20.7 billion analyst consensus. Net income plummeted 31% to $2.37 billion, resulting in earnings of 82 cents per share, also down 31% compared to the per-share profit reported this time last year. Excluding one-time items -- such as earnings recorded from discontinued operations, like the Duracell battery business, as well as other incremental profit -- P&G's core earnings per share came in at $1.06, missing the $1.13 Wall Street estimate and falling 8% compared to core EPS reported this time last year.
It should be noted that in the year-ago quarter, a negative foreign currency impact was also a theme, albeit much less severe. One month after these results were filed, P&G announced that devaluations of the Venezuelan bolivar, Argentine peso and Turkish lira would impact its full-year fiscal 2014 results -- but clearly, these and other unfavorable exchange rates have continued to have a sharp effect on a company that makes roughly two-thirds of its revenue outside of the U.S.
"The October - December 2014 quarter was a challenging one with unprecedented currency devaluations," P&G chairman, president and CEO A.G. Lafley said of the second quarter in a statement Tuesday morning. "Virtually every currency in the world devalued versus the U.S. dollar, with the Russian Ruble leading the way."
Lafley went on to say that while the company continued to make "steady progress" on its transformation, an effort that includes focusing on its core categories, innovating products and increasing savings, "the considerable business portfolio, product innovation, and productivity progress was not enough to overcome foreign exchange."
Within P&G's many brand segments, the baby, feminine and family care segment saw its organic sales grow 4%, the most of any product segment. Fabric and home care organic sales increased 3%, grooming increased 2% and health care increased 1%. The beauty, hair and personal product segment saw its organic sales fall 2% during the quarter, a drop P&G attributed to declines in skin and personal care products.
Looking ahead to the rest of 2015, P&G said that it now expects its full-year core earnings to be in-line or down compared to the $4.09 reported for full-year 2014, and that sales growth is now expected to be down between 3% and 4%.
"The outlook for the year will remain challenging. Foreign exchange will reduce fiscal 2015 sales by 5% and net earnings by 12%, or at least $1.4 billion after tax," Lafley said. Trying to provide some measure of optimism, he added, "We have and will continue to offset as much of this currency impact as we can through productivity driven cost savings. We are working to deliver core earnings per share as close as possible to those of last fiscal year."
Following the release of the earnings results, shares of P&G slid into negative territory in Tuesday's pre-market trading session, and shares are currently down 2.6%. Year-over-year, the stock is up 14.2%.
