Price increases contributed to Procter & Gamble’s 3% sales increase in its fiscal second quarter of 2024, which it revealed on Tuesday along with mixed quarterly earnings and revenue.
- Important Points
- For its fiscal second quarter, Procter & Gamble released a mixed set of quarterly results and revenue on Tuesday.
- Due to its plans to write down Gillette and restructure some markets, the firm reduced its projection for full-year adjusted profits per share but increased its forecast for unadjusted earnings.
- Customers have reduced their purchases of P&G products after the company raised the pricing of its Charmin toilet paper and Downy fabric softener for around two years.
Due to its plans to write down Gillette and restructure some markets, the business also reduced its projection for full-year adjusted earnings per share to a range of $6.37 to $6.43. However, it did not change its forecast for unadjusted earnings. In the early trading session, the company’s shares saw a gain of almost 4%.
This is how P&G’s results compare to what Wall Street had anticipated based on an analyst survey conducted by LSEG, previously Refinitiv:
- Earnings per share: $1.84 adjusted vs. $1.70 expected
- Revenue: $21.44 billion vs. $21.48 billion expected
P&G reported $3.47 billion in net income attributable to the business for the fiscal second quarter, down from $3.93 billion, or $1.59 per share, in the same period last year. The owner of Tide detergent acted on a December announcement by writing down the value of the Gillette razor brand by $1.3 billion. The corporation had previously stated that it would book charges of up to $2.5 billion over the next two fiscal years for Gillette impairment charges and for restructuring its operations in certain areas, including Nigeria and Argentina.
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The company made $1.84 per share after taking restructuring and intangible impairment costs out of the equation. Revenues were $21.44 billion, a 3% increase. When acquisitions, divestitures, and foreign exchange are taken out of the equation, P&G’s organic sales increased by 4% during the quarter.
Customers have reduced their purchases of P&G products after the company raised the pricing of its Charmin toilet paper and Downy fabric softener for around two years. Only the company’s grooming division saw volume rise during the quarter; the company’s overall volume was flat. The measure takes demand-driven price adjustments and currency fluctuations out of account.
On the company’s conference call, officials stated that demand has improved in Western Europe and North America. Other markets, though, saw less interest. For instance, organic sales in Greater China decreased by 15%. Executives attributed the downturn in their second-largest market, in part, to ongoing drops in consumer confidence.
P&G also reported lower demand in the Middle East, however CEO Jon Moeller expressed optimism that recent tensions sparked by the Israel-Hamas conflict will subside. Gillette is part of the grooming division, which witnessed a 1% increase in volume during the quarter. P&G’s beauty division saw flat volume for the quarter, largely due to ongoing difficulties with sales of its premium SK-II skin-care brand, especially in China. Additionally, its home care and fabric businesses reported flat volumes.
The business’s health-care segment recorded 3% volume decreases. The market for respiratory goods, such as P&G’s Vicks brand, dropped during the quarter, according to the company, as the cold and flu season started later than usual. However, the segment will probably see an increase in sales in the next quarter as more customers start to sneeze and cough. Even he had a “frog in [his] voice,” according to Moeller.
The decreasing demand for P&G’s tampons and diapers caused the company’s feminine, infant, and family care division to have a 2% decline in volume during the quarter. Only that division’s family care division—which sells Bounty paper towels—saw a rise in volume.
The company has revised its forecast for core earnings per share growth for fiscal 2024 from 6% to 9% to 8% to 9%. It has already lowered its previous forecast of 6% to 9% growth to predict unadjusted earnings per share to be flat to down 1%. P&G restated its prediction of 2% to 4% revenue growth in the fiscal year 2024.
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