P&G Reports Higher Sales but Lower Profits

Procter & Gamble reported higher quarterly sales Tuesday behind strength in some health and beauty products, but earnings tumbled in part due to one-time costs connected to U.S. tax reform.

Net income in the second quarter ending December 31 dropped 68 percent to $2.5 billion, in part due to a large-one time gain from a divestiture in the year-ago period.

Revenues rose three percent to $17.4 billion. 

The earnings are the first since P&G appointed activist investor Nelson Peltz to the board after a long and bruising proxy battle.

There was broad-based strength in P&G's beauty category, with Pantene and Head & Shoulders among the brands that sold well, along with premium skin-care offerings under Ski-II. 

P&G also did well in health, boosted by premium electric Oral-B toothbrush products and sales of remedies to address an "early and intense Cough/Cold season" in the U.S.

But P&G suffered another weak quarter in grooming, due in part to continued weakness in shaving products after P&G's Gillette brand cut prices to compete with other companies. Sales in this category fell one percent from the year-ago period.

P&G said the just-completed quarter was boosted by a net $135 million due to the lower U.S. tax rate in current fiscal year in the wake of tax reform. But other provisions on deferred taxes and tax repatriation forced a negative charge of $628 million during the quarter.

P&G shares fell 1.4 percent to $90.61 in pre-market trading.