What To Expect From Procter & Gamble’s Q1 Earnings

by Trefis Team
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Procter & Gamble (NYSE: PG) is scheduled to announce its fiscal first quarter results on Friday, October 20. In fiscal 2017, the company’s net sales were flat at $65 billion, and organic sales grew 2% year-over-year (y-o-y). It also reported diluted earnings per share of $5.59, up 59% y-o-y, primarily driven by the gain on the sale of Beauty Brands in the second fiscal quarter. In addition, company’s online sales grew 30% y-o-y to over $3 billion for the year, representing more than 5% of the company’s total business in fiscal 2017. However, global macroeconomic uncertainty remained an issue for the company in the fiscal year.

In terms of the bottom line, Procter & Gamble reported an earnings beat in all four quarters of fiscal 2017, and we expect this trend to continue into the fiscal first quarter as well. We also expect the company to witness slight pressure on its top line in Q1, due to rising competition from local players in the market, partially offset by the rising consumer demand in the U.S. Going forward, the company will likely have to primarily rely on efficiency improvements, cost savings, and effective marketing strategies to remain competitive.

Rise In Consumer Demand in Q1

The Absolute Consumer Demand Index of America has been falling since September of last year, and its effects have started to weigh on the results of consumer companies from the applicable regions. However, the trailing 90-day consumer demand index in the U.S. has risen by around 6% in this quarter, which suggests a revamped macro outlook for top line growth, albeit at a slower rate.

Future Outlook

P&G expects its organic sales growth to be in the range of 2% to 3% in fiscal 2018. It also expects all-in sales growth of around 3% for the same period. In terms of the bottom line, the company expects its core earnings per share growth to be in the 5 to 7% range. In addition, the company also expects its core operating profit growth to be 5% to 6%, compared to the 2% core operating profit growth in fiscal 2017.

In Q1, Reuters’ compiled analyst estimates forecast revenues of $16.7 billion and earnings of $1.07 per share, implying growth of about 1% and 4%, respectively.

See our complete analysis for Procter & Gamble

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