Procter & Gamble Co. (PG, Financial) released its third-quarter 2021 earnings before the market opened on April 20.
The consumer goods manufacturer beat earnings and revenue expectations due to strength in the skin care and beauty segment, as well as the health care and baby care divisions.
The key numbers
The Cincinnati, Ohio-based consumer goods company recorded earnings per share of $1.26, which reflected growth of 12.5% from the same period last year. Revenue of $18.1 billion rose 5% on a year-over-year basis. Analysts had predicted earnings of $1.19 per share on $17.9 billion in revenue.
Organic sales, barring the impact of foreign exchange, acquisitions and divestitures, spiked 4% courtesy of strong growth in the health care and beauty segments.
In a statement, CEO David Taylor said:
"We delivered another quarter of solid top-line, bottom-line and cash results in what continues to be a challenging operating environment. We remain focused on executing our strategies of superiority, productivity, constructive disruption and improving P&G's organization and culture. These strategies enabled us to build strong business momentum before the COVID crisis and accelerate our progress during the crisis, and they remain the right strategies to deliver balanced growth and value creation over the long term."
The company's shares declined 1.12% in premarket trading to $135 following the earnings release.
Performance of business divisions
The beauty segment experienced 7% organic sales growth, driven by strong demand for its skin and personal care products as well as higher prices. Robust demand for its newly launched Safeguard hand soap and hand sanitizer and other new products by Olay pushed North American sales for skin and personal care higher during the quarter.
The grooming business experienced a growth of 4% in organic sales. While organic sales of its appliances rose more than 20% compared to the prior-year quarter, shave care organic sales were flat on a year-over-year basis.
The health care segment recorded organic sales growth of 3% 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 decline of 1% courtesy of fall in retailer inventories. This was only partially offset by strong demand in China, which is one of P&G's largest markets.
Increased marketing spending
During the quarter, the company saved approximately $200 million due to lower overhead, media, agency and manufacturing expenses. A huge part of these savings were spent on marketing.
Guidance
For fiscal 2021, Procter & Gamble is projecting core earnings per share growth of 8% to 10%, which is line with its prior guidance. The outlook includes headwinds from foreign currency to the extent of $150 million (post-tax) and $200 million in higher freight costs. It also forecasts that sales will rise by 5% to 6%, which is again in line with its previous forecast.
The company said it will repurchase $11 billion worth of stock in fiscal 2021, which is up from its prior guidance of $10 billion.
Disclosure: I do not hold any positions in the stocks mentioned.
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