New York (AFP) - Procter & Gamble offered a tepid sales outlook Thursday after reporting a huge drop in quarterly earnings due to lower revenues and a big charge in its Venezuelan operations.
Net income for the quarter ending June 30, P&G's fourth fiscal quarter of 2015, was $521 million, down 79.8 percent from the year-ago period.
Revenues fell 9.2 percent to $17.79 billion, marking the sixth straight quarter of declining sales.
Chief financial officer Jon Moeller said the unpredictable foreign exchange market made it difficult to foresee when the company would turn around the trend of declining sales.
The maker of such household items as Crest toothpaste and Tide detergent, P&G has responded to the rising dollar by gradually implementing price increases in local currencies.
However, Moeller said the hit has been large in markets like Russia and Ukraine, where currency fluctuations have been significant.
P&G forecast a drop in 2016 sales "in the low-to-mid single digits" compared with 2015.
"We still have probably a few soft quarters ahead of us," Moeller said on a conference call with reporters.
"But that should strengthen sequentially as we get through the year and hopefully be at a market growth rate by the end of the year."
The biggest factor in the earnings drop was a $2.1 billion charge to change P&G's accounting for its Venezuela operations following a series of foreign exchange policy changes in the South American country.
Moeller said the policy changes made it impossible to account for Venezuela sales under the method used in other markets and that P&G would no longer count earnings from the country until it receives cash from its operations outside the country.
Net sales fell in all five business units, with the biggest drop in grooming at 18 percent.
The decline in grooming reflects lower demand for shaving equipment with the rise in popularity of beards and facial hair, a trend Moeller described as "primarily a US dynamic."
Moeller said demand for shaving gear is on the rise in many developing markets. P&G owns Gillette and Braun, both of which make razors.
P&G's earnings came two days after the company announced it would promote David Taylor, head of its beauty, grooming and health care business, to be the next chief executive, succeeding A.G. Lafley.
Lafley has presided over a series of divestments capped by the agreed sale of 43 beauty and fragrance brands to Coty for $12.5 billion, announced earlier in July.
Sterne Agee said patience was needed before the advantages of the makeover are apparent.
"Longer term, we think organic growth should accelerate off a smaller base and sentiment should improve when growth returns," it said in a note. "We're just not there yet."
Quarterly earnings translated into $1.00 per share, five cents above analyst expectations.
Earnings for 2015 were $7.0 billion, down 39.6 percent from the prior year.
Annual sales dropped 5.3 percent to $76.28 billion.
In midday trade, P&G shares were down 3.4 percent at $77.89, the biggest decliner in the Dow.