Cincinnati-based consumer products giant Procter & Gamble (P&G) has exceeded consensus expectations for Q4 and fiscal year results.
Go deeper with GlobalData
The double-digit earnings growth and solid top line performance in the April-June quarter has resulted in the achievement of P&G’s long-term annual growth rate targets a year ahead of objective.
“This quarter concludes a strong fiscal year where we achieved long-term growth goals ahead of schedule and laid a solid foundation for future growth,” said chairman and CEO A. G. Lafley. “Our business results continue to be strong behind our focused strategies of improving consumer value, investing behind core brands and driving cost savings to the bottom line.”
For the Q4 ended 30 June, unit volume grew 10% from the prior year, led by double-digit growth in the health care and beauty care businesses, benefits of the Clairol acquisition, and strong performance in fabric and home care. Excluding acquisitions and divestitures, unit volume increased 5%. Reported net sales were US$10.17bn, up 6% versus year-ago as pricing and mix effects partially offset volume growth.
Q4 net earnings were US$910m, US$0.64 per share. Results included a US$175m after-tax restructuring charge related to P&G’s streamlining of operations and business portfolio. This restructuring charge included employee separation costs of US$45m before tax and asset-related charges of US$136m before tax. Net earnings in the year-ago quarter were a loss of US$320m, including a US$1.16bn after-tax restructuring charge.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataCore net sales for the quarter, which exclude the impact of discontinuations of certain businesses (such as Olay Cosmetics) in the year ago period as part of P&G’s restructuring programme, grew 5%. Core net earnings growth was very strong, increasing 22% to US$1.09bn or US$0.77 per share for the quarter. Core earnings exclude restructuring charges, as well as an adjustment to the prior year to remove amortisation of goodwill and certain intangibles that is no longer required under the accounting rules.
For the FY, unit volume grew 7% behind outstanding results in health care, as well as strong progress in the fabric and home care and beauty care businesses. Reported net sales were US$40.24bn, up 4% excluding a 1% negative foreign exchange impact. The combination of mix impacts and pricing changes, primarily funded by declining material costs, partially offset volume growth. FY reported net earnings were US$4.35bn or US$3.09 per share.
Results included a US$706m after-tax restructuring, which includes employee separation costs of US$393m before tax and asset-related charges of US$360m before tax.
For the FY the company has achieved its long-term growth objectives. Core net sales were US$40.17bn, up 4% excluding a 2% negative foreign exchange impact. Core net earnings were US$5.06bn, or US$3.59 per share – an increase of 10% versus year-ago. These improvements reflect the benefits of strategic choices the company has made: sharpening the consumer value of P&G’s brands – continuing to invest in innovation – leveraging marketing strengths to build leading brands in core categories – and focusing on financial discipline to drive cost savings to the bottom line.
Food and beverage unit
In food and beverage, the April through June quarter marked the completion of the Jif/Crisco spin merge – a transaction that delivered excellent value to shareholders, equivalent to about US$0.60 per share. Adjusting for this impact, unit volume for the quarter was down slightly, while sales held flat.
On the fiscal year, food and beverage delivered solid earnings growth. Excluding the spin-merge and other divestitures, unit volume declined 2%. Volume declines and commodity-related pricing actions in coffee drove an 8% decrease in sales. Net earnings grew 16% to US$384m, as broad-based cost reductions more than offset the impact of the Jif/Crisco transaction in the Q4.
Quarterly and FY guidance
For the July-September quarter, volume is expected to be up 8% to 10%. Excluding the impact of acquisitions and divestitures, volume growth is expected to be up in the mid-single digit percentages. Sales are expected to grow in the 4% to 6% range. At current rates, foreign exchange is expected to have a slightly positive impact on the top line. Core earnings per share (EPS) are expected to be in the 11% to 15% range.
For FY 2002/03, volume growth is expected to be modestly ahead of sales. Volume growth will be stronger in the H1 until the company annualizes the impact of the Clairol acquisition in the October-December quarter. The company expects sales growth to be in the 4% to 6% range, with foreign exchange having a minimal impact on sales year over year. Core EPS are expected to grow at the company’s target rate of double-digits.
