Procter & Gamble Co. (PG, Financial) reported second-quarter 2017 earnings Friday and increased its organic sales guidance for the year.
The company is a well-known supplier of consumer goods. Its brands include Olay beauty products, Pampers diapers, Tide laundry detergent, Gillette razors, Bounty paper towels, Old Spice deodorant and Crest toothpaste.
The Cincinnati-based consumer goods company reported a 2% increase in organic sales and organic volume across all five business segments. The company also recorded net sales of $16.9 billion, which was unchanged from the prior year. Diluted net EPS increased 157% from the prior-year quarter to $2.88. This included a gain of $1.95 per share from the divestiture of its beauty brands to Coty Inc. (COTY, Financial).
The company completed the sale of around 40 of its beauty brands to Coty in a $12.5 billion deal in October. Among the brands sold were Covergirl, Wella Professionals, Clairol Professionals and Nice 'n' Easy. Procter & Gamble attributed the sale to its commitment of focusing on developing its leading brands in order to streamline and strengthen the product portfolio.
In regard to the organic growth in all five of the company’s segments, Procter & Gamble reported an increase of 3% in organic sales from a year ago in the beauty segment due to growth in hair care and skin and personal care. The grooming segment witnessed a 1% increase due to organic volume growth in both shave care and appliances. The health care segment’s organic sales increased 7% from higher organic volume in oral care and personal health care. Fabric and home care witnessed a 1% increase from last year due to innovation, marketing investments and increased prices. The final segment –Â baby, feminine and family care –Â reported a 1% organic sales increase that was driven by volume growth in all three businesses.
During the quarter, the company paid $1.8 billion in dividends, repurchased $1.5 billion worth of common stock and exchanged $9.4 billion worth of shares in the beauty brands transaction with Coty.
Due to the organic sales growth during the quarter, the company provided new organic sales growth guidance of 2% to 3% for fiscal 2017. For total sales, Procter & Gamble expects to be in line with the prior fiscal year.
Chairman, President and CEO David Taylor praised the company’s results in light of a difficult operating environment.
“Stronger top-line performance in the first half of the fiscal year is enabling us to increase our organic sales growth outlook for the full year – another step towards the levels of balanced top-line, bottom-line and cash flow growth that will consistently put P&G shareholder value creation among the best in our industry,” Taylor said.
Among the gurus invested in Procter & Gamble, Donald Yacktman (Trades, Portfolio) is the company’s largest shareholder. He owns 0.6% of outstanding shares, which represents 12.5% of his total assets managed.
Procter & Gamble has a market cap of $234.98; its shares were trading around $87.81 on Friday with a price-earnings (P/E) ratio of 23.4, a forward P/E of 22.12, a price-book (P/B) ratio of4.1 and a price-sales (P/S) ratio of 3.8.
Disclosure: I do not own any stocks mentioned in the article.
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