What Is P&G’s Revenue and EBITDA Breakdown?

Procter & Gamble‘s (NYSE: PG) stock price has fluctuated between $71 and $92 since the beginning of 2018, due to falling prices and rising cost inflation. We have an $84 price estimate for P&G’s stock, which is slightly below the current market price. We have created an interactive dashboard on P&G’s Revenue and EBITDA Breakdown, which details our forecasts on the company’s revenue and EBITDA estimates in CY 2019. You can modify our assumptions to see the impact any changes would have on the company’s earnings and valuation.

Overall, we expect P&G to generate around $66.9 billion (+2% y-o-y) in revenues in the calendar year 2018, and adjusted earnings of almost $11.5 billion. Further, we also estimate P&G’s revenues to grow 3% y-o-y to $69 billion in CY 2019. Overall, we expect $12.8 billion in the Beauty business, around $6.9 billion for the Grooming business, nearly $8.7 billion for the Health Care segment, almost $21.1 billion in the Fabric & Home Care business, and nearly $19.4 billion in the Baby, Feminine & Family Care segment.

Breakdown By Division

Procter & Gamble’s Grooming business competes in the Shave Care and Appliances market, and the company owns leading brands in these categories such as Gillette and Braun. While Gillette primarily operates in the wet shaving market, Braun is big in electric shavers and trimmers. The Grooming segment contributes only around 10% of the company’s total revenues but accounts for 15% of its value, per Trefis estimates. The segment has struggled to generate revenue growth of late, with its revenues declining through 2017, and the company seeing intense competition from cheaper subscription-based startups. However, we forecast the segment’s total revenues to return to growth in 2018. To capture a larger share of the male grooming market, P&G also launched its own direct-to-customer model Gillette-On-Demand to compete with the likes of Dollar Shave Club.

The company competes in the Baby, Feminine & Family Care segment in diapers, baby wipes, sanitary pads, and adult incontinence categories. In fact, Pampers is the company’s largest brand, with annual net sales of more than $8 billion. The segment revenues have been declining since 2014 due to rising competition from local players in emerging markets, particularly China and India. Also, the company continues to see an increasing level of competition in developed markets from established players such as Kimberly-Clark. Consequently, the company is investing in R&D to bring new innovation in this category, which can help it improve its product portfolio and better compete. We also believe that the growing competition could lead to lower prices in the near term. We expect the company’s revenues to grow in 2019 and reach $19.4 billion.

P&G’s Beauty segment constitutes of the skin, personal and hair care divisions. This segment was one of its worst-performing areas by sales and organic volume in the past few years. Accordingly, the company completed its divestiture of 41 beauty brands to Coty in 2016. The company wanted to focus only on the brands with the highest earnings value and redirect its efforts, as well as the cash from the deal, to focus on its more successful brands. We expect the company to post revenue growth in 2019, largely due to the aforementioned efforts.

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