Procter & Gamble (PG) beat second-quarter estimates by a penny and guided in line for the year, saying it expects less dilution from its Gillette acquisition.

The Cincinnati-based consumer goods giant made $2.86 billion, or 84 cents a share, for the quarter ended Dec. 31, up from the year-ago $2.55 billion, or 72 cents a share. Sales rose 8% from a year ago to $19.73 billion.

Analysts surveyed by Thomson Financial were looking for an 83-cent profit on sales of $19.57 billion.

"This was another solid quarter of broad-based sales and earnings growth during a period of heavy Gillette integration activity," said CEO A.G. Lafley. "The results this quarter and a positive outlook for sales and margin improvement give us confidence to raise our top and bottom line guidance for the fiscal year."

P&G boosted its organic sales outlook, excluding the effect of acquisitions, for the year to a 5%-6% gain from the previous 4%-6%. Total sales are expected to increase 10%-12%.

The company expects 2007 earnings per share to be in the range of $2.99 to $3.03, in line with the $3.02 Thomson Financial target. Gillette dilution, which is now expected to be toward the lower end of the previous $0.12 to $0.18 per share guidance range. Gillette dilution is tracking better than expected due to strong results on Blades & Razors and good progress on cost synergies. Operating margins are expected to improve by over 100-basis points driven primarily by gross margin improvement.

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