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Glance: P&G's outlook on the global economy

Wednesday - 6/20/2012, 1:54pm  ET

By The Associated Press

(AP) - Procter & Gamble on Wednesday cut its fourth-quarter guidance, citing a range of factors including unfavorable foreign exchange, sluggish market share gains in developed markets and slowing growth in China.

The maker of Tide detergent and Gillette razors joins a chorus of companies increasingly worried about the global economy, as debt crises in Europe drag on and emerging markets like India, Brazil and China face a slowdown. Because it sells products people use every day, it has a unique window into how shoppers are spending their money.

Procter & Gamble's guidance cut came during a presentation at the Deutsche Bank Consumer Conference in Paris. Here's a look at what the world's largest consumer products company had to say about the economy.


CEO Bob McDonald said that there has been "slow-to-no" growth in gross domestic product in developed markets like North America and western Europe, and significant unemployment. In the U.S., about 25 percent of households have at least one person looking for a job, McDonald said.

P&G has been expanding in emerging markets as developed markets like North America slow.


Emerging markets pose their own challenges. McDonald said foreign exchange, or the exchange of one currency into another, had been expected to add 2 or 3 percentage points to revenue growth. In fact it has hurt revenue by $3 billion. P&G is also dealing with government-mandated price reductions in Venezuela and import restrictions in Argentina.

"It's our job to overcome these _ but we haven't always been able to do this, in part because we haven't been hitting on all cylinders internally," McDonald said.


Cincinnati-based P&G said revenue is expected to drop 1 percent to 2 percent compared with a prior outlook for a 1 percent to 2 percent increase.

Compounding the problem is a slowdown in growth in markets that have been white hot.

"We've seen sequential deterioration in the rates of market growth in both the U.S. and Europe, and there has been a slowdown in the rate of market growth in China," McDonald said.

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