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Procter & Gamble is watching emerging market turmoil—and male facial hair—closely

Procter & Gamble—the world’s biggest household goods manufacturer and the company behind Duracell batteries, Oral-B toothbrushes, and Herbal Essences shampoo, among many others—reported a 16% decline in quarterly earnings this morning. (Its shares are up because that was still slightly better than expected.)

The behemoth manufacturer generates an estimated 40% of its revenues from emerging markets, giving it a unique insight into the tensions gripping many developing countries, which are beginning to seriously spook the markets.

“We continue to monitor unrest in Egypt, which is a large business for us and a base of export for the balance of Africa, as well as unrest and economic instability in the Ukraine, though the situation has recently improved,” chief financial officer John Moeller said on a conference call this morning. “Venezuelan price controls and access to dollars for imported products and devaluation present risk as do price controls and devaluation in Argentina.”

Emerging market currencies have taken a beating this week, with weak economic data from China and a loosening of controls in Argentina prompting a rethink about the growth potential in developing economies. But P&G said it expects its margins in developing economies to expand this year, and for foreign currency declines to moderate.

The company, which also makes Gillette shaving products, said that the rising popularity of male facial hair had affected its grooming sales, which were flat.

“While the incidence of facial shaving is somewhat down, the incidence of body shaving is up, and we can take advantage of that and plan to do that as well,” Moeller told the Financial Times (paywall).

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