P&G to take $1.2bn charge

P&G's share price has made strong gains since it announced a restructuring in March

The number one maker of household products in the US, Procter & Gamble, has said it expects to take a charge of $1.2bn, up from previous estimates of $400m to $800m as it gets its "costs and cash under control."

The billion-dollar charge against earnings will result in a net loss in the current quarter for the company, known for such products as Tide laundry detergent and Pampers diapers.

Job one was to get P&G's business growing again, and we're doing that

P&G Chief Executive Alan Lafley

The Cincinnati, Ohio-based conglomerate told analysts, however, it still expects earnings for the current three-month period and the year to be inline with current estimates.

For the three months ending 30 June - the end of P&G's fiscal year - analysts expect P&G to earn 59 cents a share and expect that for the year the company will earn $3.11 a share, according to Zacks Investment Research.

The company blamed the lack of tax relief in many developing nations as the reason for the increase in the charge.

Falling share price

P&G's share price was down over 3% in midday trading on the New York Stock Exchange, following the announcement, along with other big-name stocks as company after company stepped forward to warn over future lower profits.

In Western Europe, P&G has had a tough go of it with not only a weakened euro and pound but stiff competition as well.

Lafley: 'concentrating on big overseas markets'

In speaking to analysts on Friday, P&G president and chief executive Alan Lafley emphasised his company's plans to get its business in Western Europe growing again.

He said the companies efforts will be focused on core categories, big customers and big countries - UK, Germany, France, Italy and Spain.

"We are not where we need to be in Western Europe, but we have the right leadership and the right strategies and action plans in place to drive stronger, more profitable growth," he said.

Better second half

Mr Lafley said he expects P&G's performance to pick up in the second half of 2001 as the company begins to see benefits from its previously announced restructuring.

"Job one was to get P&G's business growing again, and we're doing that," he added.

In March, P&G announced it would lay off 9,600 workers worldwide, or 9% of its workforce, in a cost-cutting bid.

The cost of the job-cutting programme is estimated to be about $1.4bn after taxes. Through the programme, P&G plans to reduce overheads and manufacturing expenses, saving $600m to $700m by 2004.

Mr Lafley said the company intends to focus on high-growth products and countries, and develop faster growing higher profit margin businesses such as healthcare and beauty care products.