Procter & Gamble Co. (PG, Financial) released its third-quarter earnings before the market opened on April 17.
While the consumer goods manufacturer edged past earnings expectations, revenue lagged. The company cited a stronger dollar as the reason for the mixed results. Sales were driven higher as consumers bought large quantities of household items such as toilet paper, diapers and paper towels as a result of the coronavirus outbreak.
By the numbers
The consumer products giant recorded adjusted earnings of $1.17 per share, which reflected growth of 10.4% from the same period last year. Revenue of $17.2 billion rose 4.5% on a year-over-year basis. Analysts had predicted earnings of $1.11 per share on $17.4 billion in revenue.
Organic sales, barring the impact of foreign exchange, acquisitions and divestitures, climbed 6% courtesy of strong growth in the health care and beauty segments.
In a statement, CEO David Taylor said:
“The strong results we delivered this quarter are a direct reflection of the integral role our products play in meeting the daily health, hygiene and cleaning needs of consumers around the world. Our organization has been doing a terrific job against our near-term priorities – protecting the health and safety of each other, maximizing availability of P&G products to meet heightened consumer need and helping society meet and overcome the challenges of this crisis.”
Performance of business divisions
The beauty segment experienced 1% sales growth in the quarter, driven by strong demand for its skin and personal care products as well as higher prices. Demand for its super-premium SK-II brand, however, saw double-digit declines.
The grooming business experienced a drop of 4% in organic sales. While organic sales of its appliances rose by high single digits as compared to the prior-year quarter, shave care organic sales witnessed a low single-digit decrease.
The health care segment recorded organic sales growth of 9% year over year, owing to product innovation and increased pricing, which improved results particularly in oral care and personal health care.
The company’s baby care division witnessed organic sales growth of 7%, though demand fell in China, which is one of P&G’s largest markets.
Dividend payment
While most companies are cutting or suspending dividend amid the Covid-19 pandemic, Procter & Gamble has raised its quarterly dividend by 6% to 79.07 cents per share. This also marked the 130th successive year of paying dividends.
Guidance
For fiscal 2020, Procter & Gamble is projecting sales growth of 3% to 4%, which is down from its prior guidance of 4% to 5%. The company cited headwinds from foreign currency as the reason for trimming its revenue forecast. It also forecasts that earnings will rise by 235% to 245% on a per-share basis.
The company said it will repurchase $7 billion to $8 billion worth of stock in fiscal 2020.
Disclosure: I do not hold any positions in the stocks mentioned.
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