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Procter & Gamble (PG) Q1 Earnings & Sales Top, View Intact

Published 10/24/2016, 10:05 PM
Updated 07/09/2023, 06:31 AM

The Procter & Gamble Company’s (NYSE:PG) first-quarter fiscal 2017 earnings and revenues exceeded expectations.

P&G’s fiscal first-quarter adjusted earnings of $1.03 per share beat the Zacks Consensus Estimate of 98 cents by 5.1%. The bottom line also increased 5% from the prior-year quarter. Currency-neutral core EPS per share improved 12% on higher volumes.

Sales in Details

P&G’s reported net sales of $16.52 billion beat the Zacks Consensus Estimate of $16.46 billion by 0.4%. The top line, however, remained unchanged year over year. Foreign exchange had a negative impact of 3% on sales.

Organically (excluding the impact of acquisitions, divestitures and foreign exchange), revenues grew 3% on the back of a 3% increase in organic shipment volumes.

All the five business segments recorded positive organic sales growth. Health Care and Fabric & Home Care segments reported 7% and 4% growth, respectively, in the fiscal first quarter. Beauty and Grooming segments witnessed 3% organic sales growth, whereas Baby, Feminine & Family Care segment reported 2%.

Rising Margins

Core gross margin expanded 50 basis points (bps) to 51.6% as productivity cost savings and higher volume benefits were offset by currency headwinds, unfavorable mix, innovation and capacity investments and higher commodity costs.

Core selling, general and administrative expense (SG&A) margin increased 40 bps (as a percentage of sales) to 28.3% owing to benefits from overhead and marketing spending reductions due to productivity efforts. Core operating margin expanded 20 bps to 23.4% owing to productivity cost savings.

P&G has undertaken an aggressive cost-cutting plan to reduce spending across all areas like supply chain, research & development, marketing and overheads.

Financials

As of Sep 30, 2016, the company’s cash and cash equivalents were $7,456 million, up from $7,102 million at the end of fiscal 2016 (as of Jun 30, 2016). Long-term debt was $18,910 million as of Sep 30, 2016, slightly down from $18,945 million at fiscal 2016-end.

Cash flow from operating activities were $3,025 million during the quarter, down from $3,538 million a year ago.

Fiscal 2017 Guidance

The Cincinnati-based company maintained its organic sales growth projection at approximately 2% for fiscal 2017. It expects the combined foreign exchange headwind and minor brand divestitures to reduce sales by about 1 percentage points. P&G estimates all-in sales growth of about 1% for fiscal 2017.

Core earnings per share are expected to grow in mid-single digits as against the fiscal 2016 core earnings of $3.67 per share.

P&G carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Peer Releases

Colgate-Palmolive Co. (NYSE:CL) is slated to release its quarterly numbers on Oct 27. The Zacks Consensus Estimate for earnings is pegged at 73 cents.

The Clorox Company (NYSE:CLX) (NYSE:CL) is slated to release its quarterly numbers on Nov 2. The Zacks Consensus Estimate for the bottom line is pegged at $1.42.

Church & Dwight Co. Inc. (NYSE:CHD) is slated to release its quarterly numbers on Nov 3. The Zacks Consensus Estimate for earnings is pegged at 47 cents.

PROCTER & GAMBL Price, Consensus and EPS Surprise

PROCTER & GAMBL Price, Consensus and EPS Surprise | PROCTER & GAMBL Quote

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PROCTER & GAMBL (PG): Free Stock Analysis Report

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