Commodity costs hit P&G profits

US consumer goods giant Procter & Gamble on Friday posted a sharp drop in quarterly profits under pressure from higher commodity costs. P&G reported net income of $1.7 billion for its fiscal second quarter ended December 31. That was 49 percent below the year-ago period but still better than analysts had expected. Adjusted earnings per share fell three percent to $1.10, topping the consensus forecast of $1.08. "The benefits from solid sales growth and cost savings were more than offset by higher commodity costs," P&G said in a statement. The maker of Crest toothpaste, Braun shavers and other global brands said quarterly revenue rose four percent to $22.14 billion, slightly below Wall Street expectations. The company lowered its earnings estimate for the current quarter, to 91-97 cents per share. Analysts had penciled in $1.06. P&G shares shed 0.5 percent to $64.50 in pre-market trade in New York. "We continue to make progress against our key business priorities in a difficult macroeconomic environment," Bob McDonald, P&G's chairman, president and chief executive, said in the statement. McDonald noted that easing commodity prices would help to drive profit growth in the second half of the fiscal year. "With the easing of commodity cost comparisons over the next two quarters, continued solid top-line growth and cost savings progress, we expect operating profit growth to accelerate in the second half of the fiscal year," he said. Sales volumes slipped one percent, slightly below market growth, in the second quarter, with weakness in developed countries offset by a nearly 10 percent jump in developing countries. The Cincinnati, Ohio-based company has a presence in about 180 countries and sells such well-known brands as Tide laundry detergent, Gillette razors, Wella hair care products and Duracell batteries.