Procter & Gamble Co.'s share price plummeted 30% to $61 in New York Stock Exchange trading March 7 following an announcement by P&G that it will fail to meet earnings forecasts for the current quarter and full fiscal year. The Dow Jones Industrial Average, of which P&G is a component, fell 374 points, or 3.68%, to 9769.03.P&G cited a host of reasons for the lower than expected results, including the cost of new-product rollouts. The company said earnings will fall 10% to 11% in the third quarter, compared to projections of 7% to 9% growth only six weeks ago. P&G also trimmed its forecast for full fiscal 2000 earnings growth to 7% from 13%. It projects sales growth of 7% to 8% for the fiscal year ending June 30. The company blamed higher material and oil prices, the high cost of European product launches and reorganization, a delay in regulatory approval of its Actonel osteoporosis drug in the U.S., and a price war, primarily with Unilever, in Latin America. The news appears to signal belt-tightening and a less ambitious new-product rollout schedule. "We are making changes in the way we launch initiatives to better balance long-term growth and near-term earnings, and are resharpening our focus on cost reduction," Chairman-CEO Durk Jager said in a prepared statement. Mr. Jager backpedaled on his earlier schedule that called for an additional 13 new brands or major line extensions by December, saying P&G will launch 10 to 15 major new initiatives in the next year or two.
Copyright March 2000, Crain Communications Inc.