P&G Q4 Profit Up 5%, But Misses View; Provides Weak Outlook

Consumer goods giant Procter & Gamble Co. (PG) reported on Friday that profit for the fourth quarter increased five percent from last year, driven by net sales growth and lower expenses.

Earnings per share for the quarter missed analysts’ estimates, but quarterly sales topped expectations by a whisker. Looking ahead, the company initiated earnings and sales growth guidance for full-year 2023 below expectations.

“The P&G team’s execution of our integrated strategies delivered strong top-line growth, earnings growth, and significant cash return to shareowners in the face of severe cost and operational headwind,” said Jon Moeller, Chairman, President and Chief Executive Officer.

Net earnings attributable to P&G for the quarter rose to $3.05 billion or $1.21 per share from $2.91 billion or $1.13 per share in the prior-year quarter.

On average, 19 analysts polled by Thomson Reuters expected the company to report earnings of $1.23 per share for the quarter. Analysts’ estimates typically exclude special items.

Net sales for the quarter rose 3 percent to $19.52 billion from $18.95 billion in the same quarter last year. Analysts had a consensus revenue estimate of $19.40 billion for the quarter.

Excluding the net impacts of foreign exchange, acquisitions and divestitures, organic sales also increased 7 percent, driven by an eight percent increase in pricing, partially offset by a one percent decrease in volume primarily due to pandemic-related lockdowns in Greater China and reduced operations in Russia.

Beauty segment sales decreased 1 percent and Grooming segment sales declined 3 percent, while Health Care segment sales increased 5 percent, Fabric and Home Care segment sales improved 4 percent as well as Baby, Feminine and Family Care segment sales increased 3 percent from last year.

Selling, general and administrative expense (SG&A) as a percentage of sales decreased 340 basis points, driven by 180 basis points of leverage benefit due to increased sales and 200 basis points of overhead savings and marketing efficiencies, partially offset by 30 basis points of other impacts.

“As we look forward to fiscal 2023, we expect another year of significant headwinds. We remain committed to our integrated strategies of superiority, productivity, constructive disruption and an agile and accountable organization structure,” added Moeller.

Looking ahead to fiscal 2023, the company now projects earnings per share growth in the range of 0 to 4 percent from the base fiscal 2022 earnings of $5.81 per share, implying earnings in a range of $5.81 to $5.83 per share.

The company also now projects annual all-in sales growth of 0 to 2 percent and organic sales growth of 3 to 5 percent.

The Street expects the company to report earnings of $6.12 per share on revenue growth of 2.2 percent to $81.81 billion for the year.

The Company added that its current outlook estimates headwinds of approximately $3.3 billion after-tax from unfavorable foreign exchange, higher commodity costs and higher freight costs.

The combined impact of commodities, freight and foreign exchange is approximately a $1.33 per share headwind to fiscal year 2023 earnings per share, or a 23 percentage point headwind to earnings per share growth.

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