P&G Not As Recession-Proof As Thought (PG)

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Procter & Gamble Co. (NYSE: PG) was supposed to be about as immune to a recession as any company could be.  It is in the category behind food and water and a few others.  Everyone knows there is no such thing as "truly recession proof" and the company fessed up this morning that its is not immune to the current economy. 

The company’s fiscal second-quarter sales are not tracking according toplan.  P&G blamed the weak economy as retailers, distributors andcustomers cut back on their spending globally.

P&G does still expect to meet its quarterly and full-year profitgoals, but its organic sales will fall short of the 4% to 6% growthtarget in the quarter. The company stillexpects organic sales to grow 4% to 6% for its fiscal 2009 that ends inJune.

P&G also maintained its quarterly outlook of $1.58 to $1.63 EPS andfull-year earnings of $4.28 to $4.38 EPS.  Analysts are looking for$1.58 EPS for the quarter and $4.28 EPS for fiscal year ending June 2009.  Technically, this is not an earnings warning.  But it is a softening up of expectations, and you should expect analysts to start cutting their estimates over the next few days as a result of this forecast.

While this has been a go-to defensive stock, the comments here are tolerable.  Shares are already down 20% from their 52-week lows, which is considerable for a company of this size in the consumer products sector.

Shares are indicated down marginally, but so far no trading volume has been seen.

Jon C. Ogg
December 11, 2008