P&G Reports Higher Profits, Announces Charge on Japan Quake
CINCINNATI (AP) _ Procter & Gamble Co. reported a 15 percent gain in second-quarter earnings Thursday, attributing the performance to stronger sales of its consumer products worldwide.
The company also said it would record a $50 million accounting charge against third-quarter earnings to help its employees and repair plants damaged by the Jan. 16 earthquake that devastated Kobe, Japan.
P&G earned $750 million, or $1.06 per share, in the three months ended Dec. 31, compared with earnings of $653 million, or 92 cents per share, in the same period a year earlier.
Sales rose 9 percent to $8.47 billion from $7.79 billion.
Volumes increased in all of P&G’s businesses and geographic markets. Cost controls begun with the company’s 1993 restructuring helped the results, and favorable currency exchange rates contributed 2 percent to earnings, chairman Edwin L. Artzt said.
The company credited 3 percent of the quarter’s volume growth to businesses acquired last year, including VP-Schickedanz, a German tissue and towel maker, and the Giorgio Beverly Hills Inc. fragrance business.
For the six months to Dec. 31, earnings were $1.54 billion, or $2.18 per share, up 17 percent from $1.32 billion, or $1.87 per share a year earlier. Six-month sales rose to $16.63 billion from $15.35 billion.
Procter & Gamble shares were up 37 1/2 cents at $63 in late-morning trading on the New York Stock Exchange.
P&G said the $50 million charge in the January-March period would cover repairs of its Japanese plants and offices and emergency loans and grants to Japanese employees to help rebuild homes and replace possessions.
P&G employs 6,000 people in Japan, including 2,600 in the Kobe area. None were killed or seriously injured in the quake, but many employee homes were destroyed or severely damaged.
``Given the magnitude of the disaster, we’re grateful that our people and our business has come through it so well,″ Artzt said.
He said the company would try to make up the $50 million through savings in other businesses, but does not know yet whether it can offset all the cost.
The company said it expects little help from insurance coverage. Earthquakes insurance is expensive and difficult to obtain in Japan.
The quake damaged P&G’s Japan headquarters and technical center on Rokko Island in Kobe Bay. It also hobbled a plant near Kobe that makes diapers and feminine protection pads. Both facilities will be repaired. Four other P&G manufacturing plants in Japan were not affected.
P&G has set up a temporary headquarters in Osaka to oversee its Japanese operations.
P&G expects the damage and rebuilding at Kobe to cost the company 2 to 3 percent of its Japanese sales for an indefinite time, Artzt said. The company has $1.7 billion in annual sales in Japan.