P&G Reports Better-Than-Expected Earnings; Raises Sales Growth Outlook For Fiscal 2022
P&G Reports
The Procter & Gamble Company $PG: $162.00(3.36%) on Wednesday posted better-than-expected second-quarter earnings and revenue as price hikes mitigated higher commodity and freight costs.
The company not only revised its outlook for sales growth but also raised alarms on inflation that may impact its fiscal 2022 results.
Results In A Brief:
Earnings per share for the second quarter was $1.66, as against $1.65 expected by the Wall Street
Revenue during the quarter was $20.95 billion, above the expectations of $20.34 billion
The consumer giant posted earnings of $1.66 per share as against $1.47 per share a year ago. Analysts surveyed by Refinitiv had an estimate of $1.65 per share.
Net sales increased 6% to $20.95 billion, beating expectations of $20.34 billion.
Organic revenue, excluding the impact of foreign currency, acquisitions and divestitures, also saw a growth of 6% in the quarter ended. Hiked prices on selected products contributed to more than half of this growth.
More price increases are likely to happen. In a conference call with analysts, executives said that they have in advance told the retailers that fabric care products, like Tide detergent and Downy dryer sheets, may see a price hike, with effect from Feb. 28. In mid-April, P&G will increase the prices of personal health care products also.
Healthcare and fabric and home-care divisions of P&G, both reported a jump of 8% in organic sales, the highest amongst all divisions.
An intense cough/cold/flu season boosted the organic sales of its personal health-care business by 20% for the quarter, increasing demand for Vicks and ZzzQuil products. P&G’s oral-care products, which includes Oral-B toothbrushes and Crest toothpaste, sales marginally improved on the back of price hikes.
Price hikes also augmented P&G’s home-care segment sales, having brands like Febreze and Mr Clean under its portfolio. The pandemic has created more demand for cleanliness. P&G’s fabric-care unit posted double-digit growth, owing to the increased sales in fabric enhancers and laundry detergent pods.
P&G grooming business, which includes Venus and Gillette, reported a 5% jump in organic sales due to “increased pricing and positive mix driven by the growth of premium shavers and stylers”.
Organic sales of P&G’s baby, feminine and family care segment increased 5% in the quarter, mainly due to increased prices.
P&G’s beauty segment organic sales rose just 2% during the quarter; the three acquisitions made in the category over the last three months, namely Farmacy Beauty, hair-care brand Ouai and Tula Skincare, are expected to bolster this segment.
Also Read: Procter & Gamble Stock Plunges Despite Q1 Earnings Top Estimates; 2022 Forecast Unvaried
Outlook:
For fiscal 2022, P&G is looking for a 3% to 4% sales growth, higher than the previous forecast of 2% to 4%.
“P&G increased its outlook for adjusted free cash flow productivity to 95% and now expects to pay over $8 billion in dividends and repurchase $9 billion to $10 billion of common shares in fiscal 2022. Combined, P&G now plans to return $17 billion to $18 billion of cash to shareowners in the fiscal year,” said the consumer goods company.
Consecutively for the second quarter, P&G raised its inflation forecast.
The Company said, “its current fiscal 2022 outlook includes headwinds of $2.3 billion after-tax from higher commodity costs, $300 million after-tax from higher freight costs and $200 million after-tax from negative foreign exchange impacts. Combined these items are a $2.8 billion after-tax headwind, or approximately $1.10 per share, to fiscal 2022 earnings versus fiscal 2021.”
On the Quantale dashboard, a real-time stock monitoring tool, the impact of the earnings on the stock activity will be observed as the day proceeds.
The shares of P&G opened at $157.61 apiece, and at 13:30 eastern time, the stock was trading at $162.6.
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