ATLANTA (Reuters) - U.S. consumer products companies posted mixed results on Wednesday, highlighting the difficulty companies are facing in controlling costs while competing effectively as soaring gasoline and food prices drain more buyers' spending money.
By Karen Jacobs
ATLANTA (Reuters) - U.S. consumer products companies posted mixed results on Wednesday, highlighting the difficulty companies are facing in controlling costs while competing effectively as soaring gasoline and food prices drain more buyers' spending money.
Procter & Gamble Co <PG.N>, the world's biggest consumer products maker, and Colgate-Palmolive Co <CL.N> turned in higher-than-expected quarterly earnings, helped by price increases and cost controls.
But cigarette maker Reynolds American <RAI.N> fell short of Wall Street estimates, and cut its full-year forecast.
!ADVERTISEMENT!Consumer companies are reining in overhead and raising prices as an unprecedented rise in oil boosts costs for raw materials such as resin used in packaging and plastics.
At the same time, recession worries and tighter credit are causing consumers to pull back spending on discretionary items and big-ticket goods.
Last week, Newell Rubbermaid <NWL.N>, which makes hair and baby products, cookware and pens, cut its full-year forecast, saying its price increases would not fully offset the higher costs this year.
Procter & Gamble said on Wednesday that it would broadly boost prices across most product categories but added it doesn't expect the increases to hurt its leading market position.
"Material and energy costs for next year are even more challenging," P&G Chief Financial Officer Clayton Daley told a conference call.
The maker of Tide detergent and Gillette razors said third-quarter profit rose to $2.71 billion, or 82 cents a share, from $2.51 billion, or 74 cents a share, a year earlier. Sales at P&G gained 9 percent.
"TOP-LINE EXPANSION"
Colgate's first-quarter profit fell to $466.5 million, or 86 cents a share, from $486.6 million, or 89 cents a share, a year earlier. Excluding charges, profit was a penny ahead of analysts' expectations as tracked by Reuters Estimates.
"We continue to believe that Colgate is executing at a high level and market share gains, price increases and new products should contribute to sustained top-line expansion in 2008," said SunTrust Robinson Humphrey analyst William Chappell in a research note.
Still, analysts warned that Colgate's flat full-year gross profit margin was a concern, and its shares were down almost 5 percent at $72.00.
Reynolds American's first-quarter profit disappointed because of declining sales of cigarette brands on which it focuses less marketing, and discounts by rivals.
The company cut its profit forecast for the year, citing the challenging economic environment, and its shares dropped as much as 8 percent to a two-year low.
"It's obvious that our first-quarter performance was weaker than expected and that our efforts to improve promotional efficiency and increase margins were not in sync with the economic and competitive environment," said R.J. Reynolds Chief Executive Daniel Delen in a statement. "We are adjusting our programs to make sure that our brands are competitive."
P&G shares were up $2.37, or 3.6 percent, to $68.27 on the New York Stock Exchange, while Reynolds American was down $3.59, or 6.2 percent, to $54.26.
(Additional reporting by Ben Klayman and Brad Dorfman in Chicago and Justin Grant in New York; Editing by Brian Moss)
