P&G profits drop as it fights teen abuse of laundry pods

P&G profits drop as it fights teen abuse of laundry pods

NEW YORK: Procter & Gamble reported lower quarterly earnings on Tuesday (Jan 23) due in part to costs from US tax reform, and said it was amplifying efforts to counter teen abuse of its Tide detergent.

The consumer goods conglomerate said net income in the second quarter ending Dec 31 dropped 68 per cent to US$2.5 billion, but that was in part because it faced comparison against the year-ago period which boasted a large-one time gain from a divestiture.

Revenues rose three per cent to US$17.4 billion in the latest quarter.

P&G suffered another weak quarter in grooming, due to continued weakness in shaving products after the Gillette brand cut prices to compete with other companies. Although volumes rose, the value of sales in this category fell one percent from the prior year.

There was broad-based strength in P&G's beauty category, with Pantene and Head & Shoulders among the brands that sold well, along with premium skin-care offerings under Ski-II.

Fabric care, which includes Tide, was another strong category, although sales trends have lately been upstaged by a disturbing trend of teens daring each other to eat or chew on single-load packets of the laundry soap and posting videos that have gone viral and led to a surge in poison centre visits.


P&G is working with social media companies to remove the videos showing these activities, and has joined with other organisations to spread the word about the dangers of the trend, said chief financial officer Jon Moeller.

"Our standards and protocols for safety are stringent, our labels and warnings are clear, but they can't prevent intentional abuse fuelled by poor judgment and the desire for popularity among peers," Moeller said on a conference call with reporters.

"We're going to have to work with the broader part of society to address that."

There were 86 "intentional exposures" by teens of the Tide product through the first three weeks of 2017 at US poison centers, the American Association of Poison Control Centres said on Monday.

"We cannot stress enough how dangerous this is to the health of individuals - it can lead to seizure, pulmonary edema, respiratory arrest, coma, and even death," said Stephen Kaminski, executive director of the association.

Tide recently posted a video on Twitter with Super Bowl-bound New England Patriots player Rob Gronkowski stressing that the pods are to be used only for washing clothes.

"No, no, no, no, no, no, no," the finger-wagging American football player said. "What the heck is going on people? Use Tide pods for washing, not eating."

P&G also said the just-completed quarter was boosted by a net US$135 million due to the lower US tax rate as a result of the recently-passed tax reform. But other provisions on deferred taxes and tax repatriation forced a negative charge of US$628 million during the quarter.

Despite the hit in the just-completed quarter, Moeller characterised the tax cut as "a very positive change" that would benefit P&G long-term.

The earnings are the first since P&G appointed activist investor Nelson Peltz to the board after a long and bruising proxy battle. Moeller said Peltz, who joins the board on March 1, had yet to be assigned specific board committees.

P&G shares fell 1.4 per cent to US$90.60 in pre-market trading.

Source: AFP/de