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P&G hit by pressure in developed markets, pricing

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Procter & Gamble Co (PG-N) lowered its profit outlook for the year on Friday on weakness in developed markets, decisions by competitors against matching its price increases for some products, and pricing pressure in Venezuela.

At the same time, the world's largest household products maker is working on a new restructuring plan and continues to feel some pressure from higher costs for commodities such as diesel fuel, alcohol and chemicals.

In developed markets, there is basically flat volume growth in the categories where P&G competes, chief executive officer Bob McDonald told reporters on a morning conference call.

"The CEOs I talk to basically say that they see a decelerating trend," McDonald said. Much of the growth that could come in developed markets "will be share growth, because the markets aren't growing."

P&G, like many other household products makers, has raised prices to mitigate the impact of higher commodity costs.

P&G rolled out $3.5 billion US worth of price increases this year, but about $100 million to $200 million of them did not stick since competitors did not match them, chief financial officer Jon Moeller said on the call.

Now P&G is rescinding some of the increases, either by lowering prices or keeping them the same while increasing the size of the products. The rollbacks are coming in laundry detergent in the United States, United Kingdom and Mexico, and North American oral care, dishwasher detergent, and blades and razors.

At the same time, new regulations in Venezuela forced P&G to reduce prices in that market -- more than a $1 billion one for the company -- by as much as 25 percent, Moeller said.

PROFIT FALLS

Earnings fell to $2.41 billion, or 82 cents per share, in the third quarter ended in March, from $2.87 billion, or 96 cents per share, a year earlier.

The company took charges for its restructuring, which calls for eliminating 5,700 nonmanufacturing jobs and cutting $10 billion in costs by the end of fiscal 2016.

Core earnings per share, which exclude items such as restructuring charges, were flat at 94 cents. The results topped analysts' expectations of 93 cents, according to Thomson Reuters I/B/E/S.

Sales rose 2 percent to $20.19 billion.

The results came a day after rival Colgate-Palmolive Co's quarterly profit met analysts' expectations, with sales that rose slightly more than Wall Street expected.

P&G said it now expected to post core earnings per share of $3.82 to $3.88 for this year. Back in February, it had forecast $3.93 to $4.03 for the year ending in June.

Analysts were looking for a profit of $3.96 per share.

P&G outlined its restructuring plan in February.

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