P&G's profits hit by dollar strength

The strong US dollar pulled down Procter & Gamble's sales by 8 percentage points in the opening months of 2015 as the world's largest consumer goods company reported third-quarter earnings that missed analyst expectations.

The maker of Tide detergent and Pantene shampoo generates nearly two-third of its business outside the US, making it vulnerable to a dollar that has risen more than a fifth since July.

P&G's sales for the three months ended March fell 8 per cent from the same period a year ago to $18.1bn, the company said, missing analysts' forecasts of $18.5bn.

Net income dropped 17 per cent to $2.19bn, or 75 cents per share, below forecasts of 90 cents per share. On a currency-neutral basis, stripping out one-time items, Procter made 92 cents per share.

P&G's sales have fallen for five quarters in a row as the Ohio-based company has struggled to draw customers.

The disappointing results were "largely in-line with what we had expected," said AG Lafley, chief executive. "As we have done before, we'll offset foreign exchange over time through a combination of pricing, mix enhancement and cost reduction."

Shares in Procter & Gamble - which have fallen 9 per cent so far this year, underperforming the broader index - were down 1.25 per cent in lunchtime trading in New York.

Net sales in P&G's beauty line - reportedly being considered for sale - fell 11 per cent, its ninth consecutive quarterly drop, while "grooming" sales, including Gillette razors, fell 3 per cent.

Mr Lafley, 67, was brought back from retirement in 2013 for a second stint as chief to turnround the company, whose sales have been sluggish since the financial crisis when consumers cut back on buying. P&G's promotion of David Taylor to run global beauty, grooming and health businesses accounting for more than 40 per cent of its revenues has ignited speculation about succession.

Since taking the helm, Mr Lafley has tried to simplify P&G's business whose portfolio had become bloated after a string of acquisitions, under the assumption that the consumer goods industry is offering people more products than they want.

"There is a lot of evidence . . . that the shopper really doesn't want more assortment and more choice," he said last summer.

Mr Lafley has since sold its Duracell battery, pet food, and Pringles crisps businesses and made plans to shut down 100 underperforming brands which made up about 10 per cent of its revenue, to focus on its 70-to-80 big labels. So far the company has divested, consolidated or discontinued 35 brands.

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