NEW YORK (AP) — Procter & Gamble Co. on Wednesday lowered its fourth-quarter earnings and revenue forecasts, the latest company to sound warning bells about slowing global economic growth.
P&G, which makes an array of everyday goods ranging from Tide detergent to Gillette razors, said it is cutting the forecast because of unfavorable foreign exchange rates, continued slow growth in developed markets and a slowdown of growth in China.
Many U.S. companies have looked to emerging markets as economic growth in North America and Europe has slowed. But P&G's and others' warnings show that expanding abroad is a complicated task for even the largest of companies.
Earlier this month McDonald's said economic volatility, particularly in Asia, is pressuring its second-quarter results. Package delivery company FedEx Corp. on Tuesday said the slowing global economy is expected to crimp its growth over the next 12 months. Its rival UPS in April similarly said slowing Asian shipments hurt quarterly results.
And a wide range of companies including software maker Adobe Systems Inc., medical device maker Synergetics USA and industrial products maker Actuant Inc. have said uncertainty in Europe and slower growth in Asia are hurting.
A few months ago, Europe's economy seemed more positive, Moody's Chief Economist John Lonski said. But that view has darkened in recent months as uncertainty over debt crises in countries such as Spain and Greece dragged on longer than expected. That in turn has led to a slowdown in emerging markets such as Brazil, India and China.
"Global growth is slower than anticipated," he said. "And though it's a stretch to predict the imminence of a global recession, the worldwide slowdown has been great enough to prompt downward revisions of revenue forecasts by multinational corporations."
P&G's cut, announced during a presentation at a Deutsche Bank Global Consumer conference in Paris, is its second in three months. The company is trying to balance growth in emerging markets, which make up about 30 percent of its sales, with the realities of an uncertain global economy and its own executional problems that have led to lackluster market share growth.
Last month P&G said it was rethinking overseas expansion and would focus on its biggest and most profitable markets abroad.
On Wednesday, CEO Bob McDonald reiterated that strategy as well as the company's cost-cutting program, aimed at saving $10 billion by fiscal 2016.
"We are making the necessary adjustments to our growth strategy to increase focus on our core business and to achieve more balanced growth across geographies, product categories and the top and bottom lines," he said in a statement accompanying the presentation.
The world's largest consumer products company said it expects adjusted fourth-quarter earnings between 75 cents and 79 cents per share, down from its previous estimate of 79 cents to 85 cents per share.
Revenue is anticipated to drop 1 percent to 2 percent compared with a prior outlook for a 1 percent to 2 percent increase. The new guidance implies revenue in a range of $20.45 billion to $20.66 billion.
Analysts polled by FactSet foresee earnings of 82 cents per share on revenue of $20.62 billion.
P&G reiterated a plan announced last month that it will prioritize investments in its biggest product innovations, its biggest and most profitable markets and its biggest emerging countries. It also plans to keep investing in new markets.
For fiscal 2013, Cincinnati-based P&G expects adjusted earnings to be up by a mid-to-high single digits percentage rate. The company said it will give an update to the projection when it reports its fiscal 2012 results on Aug. 3.
Its shares fell $2.12, or 3.4 percent, to $60.09, in afternoon trading. Its shares are down 11 percent since peaking for the past year at $67.95 in mid-March. They traded as low as $57.56 last August.
Citi Investment Research analyst Wendy Nicholson said P&G's struggle with market share growth is "discouraging," but said there were some positives in the presentation.
"P&G is clearly saying 'no excuses' and adopting a more aggressive stance about taking responsibility for and fixing their problems," she wrote in a note to investors.
Also on Wednesday, the company reaffirmed its restructuring plan, which involves cutting 5,700 jobs by the end of fiscal 2013 and saving $10 billion by the end of the fiscal 2016.
Like many other consumer products companies, P&G has also been raising prices to deal with higher costs for materials like pulp, fuel and packaging. But in April, P&G said it was rolling back prices in six categories: powdered laundry detergent in the U.S., laundry products in Mexico and the U.K., and North American oral care, dish care and blades and razors. Aside from those categories, other price increases have remained in place.