The Procter & Gamble Company (NYSE: PG), the world's largest maker of household goods and cosmetics, is expected to report increased profit in its fiscal third quarter as cost-cutting and increased domestic market share offset weakened profit margins.

Cincinnati-based P&G, which will report earnings on Wednesday before the market opens, is expected to report net income of $2.79 billion, or 96 cents per share, compared with $2.41 billion, or 94 cents per share, in the same period a year earlier, according to a survey of analysts by Thomson Reuters. In February, the company reduced its forecast for earnings per share to a range of 80 cents to 88 cents from its previous estimate of 90 cents to 96 cents.

Revenue is expected to be $20.74 billion, compared with $20.19 billion in last year’s fiscal third quarter, a 2.7 percent increase. In January, the 176-year-old company estimated a 3 percent to 4 percent sales gain for the quarter.

Despite some improvements in U.S. job growth and a slowly recovering construction industry, persistently high unemployment plus the payroll tax increase have made consumers more price-sensitive. The effect has been to limit the ability of Procter & Gamble, which makes such iconic products as Crest toothpaste, Head & Shoulders shampoo, Tide detergent, Charmin toilet paper and Pampers diapers, to raise prices. Also, in some cases, market pressures prompted the company to trim prices to protect and increase its domestic market share.

Morgan Stanley said Procter & Gamble’s domestic business, which accounts for about 40 percent of the company's net sales, will be marked by “more robust innovation, greater marketing investment ... and price cuts.” In addition, “less incremental investment in emerging markets” should give a boost to Procter & Gamble’s earnings per share.

One positive factor for P&G’s fiscal third-quarter report will be “moderating input costs and higher-than-expected benefits from savings programs,” UBS said in a recent client note. Further, the company is expected to benefit from its savings program.

Outside the U.S., the company struggled against rising emerging-market competition. Market share in Western Europe and China is expected to have declined, offsetting the anticipated U.S. market share increases, UBS said.

Procter & Gamble continued its planned staff cutbacks overseas. In Spain and Portugal, for example, the company laid off about 150 staffers as it integrated Arbora & Ausonia, a hygiene company, into its existing operations. The move was part of the company's plan, announced in February 2012, to save $10 billion in costs by 2016, partly through cutting more than 4,000 jobs.

Despite Venezuela's currency devaluation in February, fiscal third-quarter earnings are not expected to have been significantly hurt by a strong dollar as much as they were in the fiscal third quarter of 2012, when a strong dollar cut non-U.S. sales by about 5 percent. 

Share buybacks in the first three months of this year also may give a boost to Procter & Gamble's earnings per share.