Key Takeaways From Procter and Gamble’s Q1 Earnings

by Trefis Team
Procter & Gamble
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Procter & Gamble (NYSE:PG) reported mixed fiscal first quarter earnings, as its earnings per share came in ahead of market expectations but revenue missed. The company’s stock fell slightly after the announcement. Below we highlight some of the most notable items from the earnings release:

  • In Q1, the company’s net sales grew 1% year-over-year (y-o-y), driven by growth in the Beauty, Fabric & Health Care segments, partially offset by declines in the Grooming, Baby and Feminine Care businesses. In addition, the company’s organic sales were up 1% on 1% volume growth, with flat pricing and mix across all segments.

  • The company’s operating margin declined 40 basis points due to halt in operations in Mexico, Texas, Gulf Coast and Puerto Rico, primarily due to series of natural disasters in these geographies during the quarter. Also, a combination of U.S. pricing investments and discontinued product brands negatively impacted the results.
  • In Beauty, P&G’s organic sales grew double digits y-o-y in Skin & Personal Care, driven by the continued growth of the super-premium SK-II skin care brand and increased pricing behind product innovation.
  • Grooming segment revenues fell 5% y-o-y, due to reduced pricing in Shave Care, driven by lower pricing in the U.S. and low volume growth globally, partially offset by double-digit growth in Appliances.
  • Feminine Care organic sales were flat in developed markets and grew in high single digits in developing markets due to favorable product mix from the growth of premium products, whereas Baby Care organic sales declined mid-single-digits as volumes declined mainly due to competitive activity.

  • The company’s online sales grew 40% y-o-y in the first quarter of 2018. Online sales represented more than 5% of the company’s total business in fiscal 2017.
  • P&G expects its organic sales growth to be in the range of 2% to 3% in fiscal 2018, despite the continued deceleration of market growth rates. 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.

See our complete analysis for Procter & Gamble

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