Diluted net earnings per share from continuing operations were $0.74, including non-core charges of $0.08 per share. Core net earnings per share were $0.82, consistent with the prior year period and $0.03 per share above the top-end of the company’s guidance range.
“We enter fiscal 2013 with very strong developing market momentum, strengthened plans on our core developed market business, and with the benefit of a $10 billion cost savings program, which is well underway,” says Bob McDonald, chairman, president and CEO. “Despite a difficult macro environment, we see significant opportunities for top- and bottom-line growth.”
Core operating profit increased 4%; including non-core charges, operating profit decreased 4%. Core net earnings per share were in line with the prior year period at $0.82. The benefits from cost savings and pricing were offset by the decrease in net sales and higher commodity costs.
Operating cash flow was $4 billion for the quarter and free cash flow, which is operating cash flow less capital spending, was $2.7 billion. Adjusted free cash flow productivity was 142% of net earnings.
Baby Care and Family Care net sales increased 1% to $4.1 billion on unit volume growth of 1%. Organic sales increased 5%. Pricing increased net sales by 4%. Foreign exchange reduced net sales by 4%. Baby Care volume increased mid-single digits behind double digit growth in developing markets driven by market size growth, product innovation and distribution expansion, and by single digit growth in developed markets due to promotional activity. Volume in Family Care decreased high single digits primarily behind a strong base year period from volume pull forward ahead of price increases. Net earnings increased 13% to $540 million primarily due to operating margin expansion. Operating margin increased driven by a higher gross margin. Gross margin increased as price increases and manufacturing cost savings were partially offset by higher commodity costs.