Source – CNBC
Consumer goods giant Procter and Gamble (P&G) posted a mixed financial performance in its fiscal second quarter of 2024, revealing a 3% revenue boost driven by strategic price increases. The company’s adjusted earnings per share exceeded expectations, but its unadjusted earnings took a hit due to a $1.3 billion write-down of the Gillette brand and restructuring efforts in certain markets. Despite the challenges, P&G’s shares rose over 4% on Tuesday.
Financial Results
P&G reported adjusted earnings per share of $1.84, surpassing the $1.70 expected by Wall Street analysts. However, the company fell slightly short of revenue expectations, with $21.44 billion against the anticipated $21.48 billion. Net income attributable to P&G was $3.47 billion, or $1.40 per share, down from $3.93 billion, or $1.59 per share, compared to the same period last year.
The write-down on Gillette aligns with P&G’s December announcement, outlining plans to incur up to $2.5 billion in charges over the next two fiscal years. Excluding these charges, P&G exceeded analysts’ projections, earning $1.84 per share. Net sales, however, saw a 3% rise to $21.44 billion, slightly below Wall Street’s estimates.
Consumer Trends and Market Performance
After a period of increased prices on products such as Charmin toilet paper and Downy fabric softener, P&G faced a consumer pullback, resulting in a flat overall volume for the quarter. Notably, only the grooming business reported volume growth. Demand improvements were noted in North America and Western Europe, while Greater China experienced a 15% decline in organic sales, partly attributed to diminished consumer confidence.
The grooming division, encompassing Gillette, saw a 1% volume growth, while the beauty segment reported flat volume, particularly impacted by the struggle of the SK-II skin-care brand in China. Procter and Gamble’s healthcare division faced a 3% volume decline due to a delayed start to the cold and flu season, though an anticipated boost is expected in the next quarter.
Outlook for Fiscal 2024
P&G adjusted its outlook for fiscal 2024, anticipating core earnings per share growth of 8% to 9%, a narrower range compared to the previous estimate of 6% to 9%. Unadjusted earnings per share, however, are now expected to be flat to down 1%, significantly lower than the earlier projection of 6% to 9% growth. The company reiterated its forecast for sales growth of 2% to 4%.
CEO Jon Moeller acknowledged challenges in various markets but expressed optimism about potential easing tensions in regions like the Middle East, anticipating improved conditions for the company. As P&G navigates market shifts, it remains focused on sustaining growth and adapting to evolving consumer dynamics.
Investors and industry analysts will be closely watching Procter and Gamble’s strategies in the coming months as the company manages ongoing challenges and seeks avenues for sustained profitability.
