Procter & Gamble Co. on Tuesday raised its current quarter and annual profit outlook due to strong volume growth in shampoo, tooth whiteners and heartburn pills.
The maker of Tide laundry detergent, Mr. Clean cleaning products and Old Spice deodorant among other brands also raised its annual dividend rate for the second time this fiscal year and set a two-for-one stock split.
The news sent the stock up about 1.5 percent in trade after the closing bell.
The moves are the latest signs of the successful turnaround at P&G, driven by cost cuts, acquisitions and a renewed focus on its larger brands in its biggest markets. P&G shares are trading at their highest level in five years.
"It looked like volume growth is slightly better than expected and is driving higher earnings," said Dan Popowics, an analyst at P&G shareholder Fifth Third Bank who also owns the company's shares personally. "That's been the case for the last couple of years."
The company cited Prilosec OTC heartburn medication, Crest Whitening Expressions toothpaste and the global expansion of Herbal Essences shampoo as some of the products driving sales growth.
P&G said it expects earnings for its third quarter ending in March and the full fiscal year to be 1 cent to 2 cents a share above analysts estimates, driven by volume growth of about 10 percent, excluding acquisitions, divestitures and the affect of foreign exchange changes.
The average estimate for the third quarter was $1.06 a share, according to Reuters Research, a unit of Reuters Group Plc. That is the same as in January, when Cincinnati-based P&G said the average estimate was at the high end of its expectations.
For the year, analysts on average forecast profit of $4.56 a share.
After they announced their new outlook, shares of P&G rose to $104.00 on the INET electronic brokerage system, matching a five-year high set on Feb. 24. The stock, which has almost doubled since hitting a low point in March 2001, closed at $102.49 on the New York Stock Exchange on Tuesday.
Tuesday marked the ninth time in 10 quarters that P&G raised its quarterly profit outlook. The company, which had seen its stock pummeled by earnings misses before A.G. Lafley took over as chief executive in 2001, has become one of the steadiest earnings producers in the consumer products group.
"The industry data suggest that its market shares are doing fairly well," Popowics said. "Certainly, its key customers, the Targets and the Wal-Marts of the world, have had good sales recently and that to some extent suggests pull-through of P&G's products."
Total sales for the quarter are expected to be up 20 percent, better than the company's previous outlook for an increase of 14 percent to 18 percent. The weak dollar is expected to boost sales by 3 percent to 4 percent, while acquisitions are expected to add 7 to 9 percentage points, the company said.
P&G raised its annual common stock dividend rate to $2 from $1.82 on a pre-split basis. The company also said it would have a 2-for-1 stock split in the form of a 100 percent stock dividend to shareholders of record May 21.
