P&G earnings sink on strong dollar

US consumer products giant Procter & Gamble Tuesday reported a sharp drop in quarterly earnings and warned of a tough year due to the strengthening dollar.

P&G, which sells Bounty paper towels, Gillette razors and other consumer staples, said second-quarter earnings were $2.4 billion, down about 31 percent from last year.

Results, however, were hit hard by the strength of the dollar.

The US currency has hit multi-year highs against other major currencies during the quarter, increasing the price of US goods in foreign countries.

Net sales dropped four percent in raw dollars. But when currency effects were stripped out, sales gained two percent.

“The October-December 2014 quarter was a challenging one with unprecedented currency devaluations,” said P&G chief executive A.G. Lafley.

“Virtually every currency in the world devalued versus the US dollar, with the Russian Ruble leading the way.”

Lafley said the outlook for the rest of the year “will remain challenging” due to the lofty dollar, with foreign exchange reducing fiscal sales by five percent and net earnings by 12 percent, or at least $1.4 billion.

P&G’s net earnings for the quarter translated into $1.06, with the foreign exchange hit at 16 cents per share. The company had been forecast by analysts to notch $1.13 per share.

Quarterly revenues were $20.16 billion, down 4.4 percent from last year.

P&G shares fell 2.5 percent to $87.25 in pre-market trade.