P&G updates guidance to reflect j.v., Pringles sale

by Eric Schroeder
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CINCINNATI — The Procter & Gamble Co. has updated previously announced all-in sales and earnings guidance for fiscal year 2012 following the creation of a new global partnership and joint venture in consumer health care that was announced Nov. 3, and to reflect the expected one-time gain from the upcoming Pringles transaction with Diamond Foods, Inc. and the cost of P&G’s incremental restructuring plans, both of which will be reported as non-core items.

“We’re excited about the long-term growth opportunities created by the joint venture with Teva,” said Jon Moeller, chief financial officer at P&G. “We are moving forward and building the benefits from the Teva JV and the Pringles transaction and the costs of our incremental restructuring plans into our all-in guidance now. While the closing of the Pringles transaction has been delayed until the second-half of our fiscal year, we wanted to provide our shareholders with perspective on the impacts from the transaction when it is completed. Also, we are well into the design process for our restructuring plans and are already beginning the implementation phase in some areas, so we are incorporating these productivity investments into our guidance as well.”

P&G said that while it continues to expect sales growth of 3% to 6% for fiscal year 2012, the company has updated its fiscal year 2012 outlook for all-in GAAP earnings per share to a range of $4.52 to $4.83, an increase of 35c to 50c per share from the previous range of $4.17 to $4.33. P&G also updated its outlook for core e.p.s. to include earnings dilution from the exit of the snacks business of zero to 2c per share in fiscal 2012 depending on the actual timing of the completion of the transaction. The company also now expects core e.p.s. in the range of $4.15 to $4.33, up 5% to 10% from the prior year core e.p.s. of $3.95.

P&G made no changes to its top-line guidance for the December quarter, but said it now expects all-in e.p.s. to be in the range of $1 to $1.11, which includes non-core restructuring spending of zero to 5c per share. Excluding the non-core restructuring costs, core e.p.s. are forecast in the range of $1.05 to $1.11, consistent with previous guidance.

Elaborating on the company’s pending sale of its Pringles business, P&G said it expects the net one-time gain on the exit of the snacks business to be in the range of 55c to 65c per share.

“The estimated range for the one-time gain is based on recent stock prices for P&G and Diamond Foods, Inc. and other assumptions such as deal costs and the book value of net assets at the time the transaction is completed,” P&G said. “This substantial gain reflects the strength of the global Pringles franchise, which P&G has built over the past four decades.”

The lost earnings from the exit of the snacks business is now expected to result in about 4c to 5c per share of annualized earnings dilution, P&G said.

“The estimated savings from the restructuring investments in fiscal year 2012 should more than offset the ongoing dilution and create potential for additional investments in growth,” the company said. “Given the timing of expected employee separations and implementation of other productivity improvements, the incremental savings will largely benefit fiscal year 2013.”

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