In figures released last week for the fiscal year ended June 30, the company posted record net earnings of $2.3 billion, a 15% increase from the year-ago period, excluding unusual items in both years. Net sales for the year were $30.3 billion, down 0.3% from last year.
Wall Street analysts were pleasantly surprised by P&G's fourth-quarter figures that show the progress made by the company's cost-reduction plan initiated in July 1993.
"Clearly the restructuring is starting to pay off, and I was very impressed that operating profit was up 20% in the quarter," said Heather Hay, analyst at J.P. Morgan Securities, New York. "The numbers were quite good top to bottom."
In particular, P&G's food and beverage sector, a longtime trouble spot, finally saw improvement.
"Sales are up 3% in food and beverage and operating margins are up to the corporate average," said Lynne Hyman, analyst at First Boston Corp. "I think this puts them in a position to look at the sector more strategically-to extend it or yes, sell it."
Other business categories that showed unit growth were detergents, up 6% in the U.S., and worldwide haircare business, up 25%. Diapers showed a 4% decline in unit volume, a category where P&G has had to play catch up with rival Kimberly-Clark Corp. in product innovations.
Unit volume overall was up 5%, with every business sector and geographic region recording increased shipments.
"The figures demonstrate that Procter is doing a terrific job cutting costs but it is also being hurt by what in aggregate is a very sluggish economic environment," Ms. Hyman said.