Turnover increase could fall flat at 0 %
P&G now estimates a 0% to 2 % turnover increase, when it had previously estimated to get at least 1 %. Its fiscal year 2013, which ended last June, resulted in total sales of 84.2 billion dollars (62 billion euro), but it seems that will be a tough act to follow this time around.
The company is also issuing a profit warning, as profit per share might now get a +3 % to +5 % increase, while the previous range was between +5 and +7 %. If exchange rates had remained stable, a 12 to 14 % increases would even have been possible.
The exchange rate movements between several currencies and the dollar is hitting the American company quite hard, especially in Venezuela with its bolivar currency. The government there has two different exchange rates and uses a less favourable exchange rate for the majority of P&G’s transactions, while the Argentine peso, Turkish lira, South African rand, Russian ruble, Brazilian real and Ukrainian hryvnja are also not really helping P&G’s bottom line.
While the American economy improves and the Federal Reserve lowers its stimulus plan, it is expected that the dollar will continue to increase in worth, which in turn will weaken the currencies in emerging countries, as was the case recently. The reason is that a lot of investors will bring their money back to the United States.
