Earnings report: P&G records 16% net surge, citing cost cuts, Clairol buy

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In a positive sign for the advertising market, Procter & Gamble Co. said it increased marketing spending last quarter and vowed to boost marketing efforts in the year ahead,

P&G, the nation's No. 2 advertiser, said earnings for the fiscal third quarter ended March 31 rose 16% to $1 billion vs. a year ago, largely due to cost reductions and the impact of the company's November acquisition of Clairol hair-care products. Unit volume growth was up 10%, while revenue rose 4% to $9.9 billion. Clairol accounted for all of the quarter's gain in dollar sales.

Chief Financial Officer Clayton Daley said marketing spending for the quarter was up both in absolute terms and as a percent of sales as P&G incorporated the more marketing-intensive Clairol business. He said he expected P&G to continue its higher marketing outlays in the year ahead as it supports new-product launches in several areas, including fabric care.

P&G executives projected the company would meet the low end of its long-term target of 4% to 6% annual sales growth and its goal of double-digit earnings growth in 2003, excluding special charges.

Rival Clorox Co., meanwhile, saw its fiscal third-quarter net income plummet 42% to $46 million, but it said sales and ad spending were up sharply. Ad spending rose 17% to $105 million as sales climbed 7% to $1.03 billion, led by 14% growth in the core North American household products business.

Tricon Global Restaurants also issued a bullish report, raising its full-year earnings guidance to $3.63 to $3.70 per diluted share from $3.56 to $3.63 on strong revenue and same-store sales at Taco Bell, KFC and Pizza Hut after it beat Wall Street's estimate by 3 cents. Revenue grew 7% to $1.6 billion and net income soared 41% to $124 million.

conflicting signals

Media companies reported mixed results, reflecting the conflicting signals of an ad recovery. Publisher and broadcaster Meredith Corp. posted a first-quarter net income drop of 5.3% to $17.9 million. Revenue dropped 5.1% to $258.4 million due to a 7.3% fall in ad revenue. Publishing revenue fell 6.5% to $199.6 million; broadcast revenue was flat at $58.8 million.

While advertising is still weak, demand appears to be strengthening among April issues, said Steve Lacy, president of Meredith's publishing group.

Interep National Radio Sales reported narrower losses in the first quarter and increased revenue guidance for the year in what could be an early indication of an ad rebound.

The leading radio sales rep firm reported a net loss of $3.8 million for the first quarter vs. a loss of $6.3 a year earlier. Revenue rose 19% to $19.9 million vs. last year's first quarter, traditionally its weakest period. The company increased 2002 guidance to $82 million to $83 million in radio revenue for the year.

contributing: cara b. dipasquale, kate macarthur and jack neff

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