Procter & Gamble 2Q earnings ould show whether household buying is yet in recession rebound

Earnings Preview: Procter & Gamble Co.

CINCINNATI — Procter & Gamble Co., the world’s largest consumer products maker, reports its second quarter results before the stock market opens Thursday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: P&G, maker of Pampers diapers and Olay skin care among other top sellers, started the fiscal year with better-than-expected earnings in the first quarter, when CEO Bob McDonald took the helm. McDonald, who added the chairman’s title Jan. 1 this year, has said the Cincinnati company is using pricing, promotions and innovation to spark sales, which had grown slowly during the recession.

P&G has been adding new versions of top products, including cheaper ones like Charmin “basic” toilet paper, and new premium products that pledge to do more, such as Tide anti-stain laundry additives. During the quarter, P&G cut the price of Cheer detergent and began offering it as a bargain brand.

The idea is to deter frugality-minded fans of P&G’s lineup of well-known brands from straying to private labels or other smaller competitors by giving them a wider variety of prices and new-product choices.

P&G also continued to adjust its portfolio, last month buying Sara Lee Inc.’s Ambi Pur air freshener business for $470 million. The company has bought several other small businesses in the past year. In the past two years, it has sold off its prescription drug business, Folgers coffee and several smaller brands.

BY THE NUMBERS: Analysts polled by Thomson Reuters on average expect P&G to earn $1.40 per share, boosted by the $3.1 billion sale of its pharmaceutical business to Warner Chilcott PLC. Analysts expect sales of $21.07 billion for the quarter. In the same period a year earlier, the company reported profit of $1.58 per share on revenue of $20.6 billion.

ANALYST TAKE: Several analysts have praised P&G’s aggressive steps to rev up sales and expect the company to continue rebounding from a rough previous year.

“We look for improving year-to-year quarterly sales comparisons,” Loran Braverman, a Standard & Poor’s analyst who rates P&G stock a “buy,” said in a recent client note.

WHAT’S AHEAD: The company is ramping up product launches, including for Pampers “Dry Max” diapers that are thinner but are supposed to keep babies drier longer. P&G also plans major marketing efforts around its sponsorship of the U.S. Olympic team for the Vancouver Winter Games that begin Feb. 12.

P&G has also indicated that it’s still interested in making acquisitions.

The manufacturer raised some eyebrows this month by announcing plans to test a Web site where it will sell its products. P&G officials have said the “eStore” is meant to give the company more information about how shoppers respond to its products online.

STOCK PERFORMANCE: P&G stock has made a comeback in the past year and hit a 52-week high during the second quarter at $63.48 in November. Its 52-week low was $43.93, reached last March. The shares closed Monday at 60.63.