P&G Profits Hurt by Rising Materials Costs
Author: Paul Ziobro</br></br>Higher commodity costs will dent Procter & Gamble Co. earnings by $1 billion in current fiscal year, double what it expected earlier.</br></br>P&G's sobering assessment of rising world-wide commodity costs came after the world's largest consumer-products company saw gross margins fall to 51.8% in its second-quarter from 53.7% a year earlier. P&G's spot prices for production materials and energy are up more than 20% from last year, Chief Financial Officer Jon Moeller said Thursday.</br></br>The higher costs come as P&G still grapples with weak demand for products in developed markets like the U.S. and Western Europe, where the economic recovery has lagged growth in emerging markets. P&G plans to offset the higher costs by raising prices in some markets and trying to sell more higher priced items.</br></br>"In terms of ability to pass through, we're really in a good position on that regard," P&G Chief Executive Bob McDonald said on an investor call.