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Procter & Gamble (PG) Beats on Q2 Earnings, Updates View
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The Procter & Gamble Company’s (PG - Free Report) , popularly known as P&G, second-quarter fiscal 2017 earnings and revenues exceeded expectations.
P&G’s fiscal second-quarter adjusted earnings of $1.08 per share beat the Zacks Consensus Estimate of $1.06 by 1.9%. The bottom line also increased 3.8% from the prior-year quarter on higher margins. Currency-neutral core EPS per share improved 9%.
P&G’s reported net sales of $16.86 billion beat the Zacks Consensus Estimate of $16.8 billion by 0.3%. The top line, however, remained unchanged year over year. Foreign exchange had a negative impact of 2% on sales.
Organically (excluding the impact of acquisitions, divestitures and foreign exchange), revenues grew 2% on the back of a 2% increase in organic volumes.
All the five business segments recorded positive organic sales growth. The Health Care segment reported 7% growth in the quarter. The Beauty segment witnessed 3% organic sales growth whereas Grooming, Fabric & Home Care Baby, as well as Feminine & Family Care segments reported 1% growth, respectively.
Rising Margins
Core gross margin expanded 70 basis points (bps) to 51.5% as productivity cost savings and higher volume benefits were offset by headwinds like unfavorable mix and commodity cost increases.
Core selling, general and administrative expense (SG&A) margin rose 70 bps (as a percentage of sales) to 28% as productivity savings were partly offset by higher investments. Core operating margin remained flat year over year.
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 Dec 31, 2016, the company’s cash and cash equivalents were $6,051 million, down from $7,102 million at the end of fiscal 2016 (as of Jun 30, 2016). Long-term debt was $16,460 million as of Dec 31, 2016, down from $18,945 million at fiscal 2016-end.
Cash flow from operating activities were $3,000 million during the quarter, down from $4,480 million a year ago. Adjusted free cash flow was $2,384 million in the second quarter, down from $3,789 million a year-ago.
Fiscal 2017 Guidance
The Cincinnati-based company raised its organic sales growth projection to a range of about 2–3% from 2% projected earlier for fiscal 2017. However, the company now expects the combined foreign exchange headwind and minor brand divestitures to reduce sales by about 2–3% (earlier 1%). Hence, P&G expects all-in sales growth to remain flat (1% earlier) for fiscal 2017.
The core earnings per share growth projection is maintained in the mid-single digit range as compared with fiscal 2016 core earnings of $3.67 per share.
Colgate-Palmolive Co. (CL - Free Report) is slated to release its quarterly numbers on Jan 27. The Zacks Consensus Estimate for earnings is pegged at 75 cents.
The Clorox Company (CLX - Free Report) is scheduled to release its quarterly numbers on Feb 3. The Zacks Consensus Estimate for the bottom line stands at $1.23.
Church & Dwight Co. Inc. (CHD - Free Report) is slated to release its quarterly numbers on Feb 7. The Zacks Consensus Estimate for earnings is pegged at 43 cents.
Procter & Gamble Co. Price, Consensus and EPS Surprise
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Procter & Gamble (PG) Beats on Q2 Earnings, Updates View
The Procter & Gamble Company’s (PG - Free Report) , popularly known as P&G, second-quarter fiscal 2017 earnings and revenues exceeded expectations.
P&G’s fiscal second-quarter adjusted earnings of $1.08 per share beat the Zacks Consensus Estimate of $1.06 by 1.9%. The bottom line also increased 3.8% from the prior-year quarter on higher margins. Currency-neutral core EPS per share improved 9%.
Sales in Details
P&G’s reported net sales of $16.86 billion beat the Zacks Consensus Estimate of $16.8 billion by 0.3%. The top line, however, remained unchanged year over year. Foreign exchange had a negative impact of 2% on sales.
Organically (excluding the impact of acquisitions, divestitures and foreign exchange), revenues grew 2% on the back of a 2% increase in organic volumes.
All the five business segments recorded positive organic sales growth. The Health Care segment reported 7% growth in the quarter. The Beauty segment witnessed 3% organic sales growth whereas Grooming, Fabric & Home Care Baby, as well as Feminine & Family Care segments reported 1% growth, respectively.
Rising Margins
Core gross margin expanded 70 basis points (bps) to 51.5% as productivity cost savings and higher volume benefits were offset by headwinds like unfavorable mix and commodity cost increases.
Core selling, general and administrative expense (SG&A) margin rose 70 bps (as a percentage of sales) to 28% as productivity savings were partly offset by higher investments. Core operating margin remained flat year over year.
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 Dec 31, 2016, the company’s cash and cash equivalents were $6,051 million, down from $7,102 million at the end of fiscal 2016 (as of Jun 30, 2016). Long-term debt was $16,460 million as of Dec 31, 2016, down from $18,945 million at fiscal 2016-end.
Cash flow from operating activities were $3,000 million during the quarter, down from $4,480 million a year ago. Adjusted free cash flow was $2,384 million in the second quarter, down from $3,789 million a year-ago.
Fiscal 2017 Guidance
The Cincinnati-based company raised its organic sales growth projection to a range of about 2–3% from 2% projected earlier for fiscal 2017. However, the company now expects the combined foreign exchange headwind and minor brand divestitures to reduce sales by about 2–3% (earlier 1%). Hence, P&G expects all-in sales growth to remain flat (1% earlier) for fiscal 2017.
The core earnings per share growth projection is maintained in the mid-single digit range as compared with 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. (CL - Free Report) is slated to release its quarterly numbers on Jan 27. The Zacks Consensus Estimate for earnings is pegged at 75 cents.
The Clorox Company (CLX - Free Report) is scheduled to release its quarterly numbers on Feb 3. The Zacks Consensus Estimate for the bottom line stands at $1.23.
Church & Dwight Co. Inc. (CHD - Free Report) is slated to release its quarterly numbers on Feb 7. The Zacks Consensus Estimate for earnings is pegged at 43 cents.
Procter & Gamble Co. Price, Consensus and EPS Surprise
Procter & Gamble Co. Price, Consensus and EPS Surprise | Procter & Gamble Co. Quote
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>