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Organic Sales Up, Profits Down At P&G

May 4, 2009

Pricing and mix offset lower volume and bring 6% net benefit.

P&G has closed its third quarter with declines in both sales and earnings despite a 1% increase in organic sales. The slight increase in organic sales reflects a 6% net benefit from pricing and mix, which offset lower volume. During the quarter, sales fell 8% to $18.4 billion, below the $18.9 billion analysts had forecast, including a 9% hit from the U.S. dollar. The company attributes the sales decline to a 9% unfavorable foreign exchange impact.

During the third quarter ended March 31, P&G earnings fell to $2.61 billion from $2.7 billion when there were more shares outstanding.Meanwhile, P&G posted a 4% drop in quarterly profit as consumers switched to less expensive items.

"We delivered good third quarter results in a very challenging macroeconomic environment," said chairman of the board and chief executive officer A.G. Lafley. "We grew organic sales and EPS, maintained global value share and generated strong cash flow. Our near term efforts are focused on enhancing consumer value, driving productivity and simplification, and making the necessary investments for the future. We continue to invest at leadership levels in innovation, brand building, capacity and capabilities and are confident in our long term growth prospects."

P&G’s Baby Care and Family Care net sales decreased 2% during the quarter to $3.5 billion. Net earnings declined 10% to $423 million primarily due to foreign exchange impacts and a commodity cost-driven reduction in gross margin.

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