In Trends

P&G announces financial results

p&g

The Procter & Gamble Company reported first quarter fiscal year 2021 net sales of $19.3 billion, an increase of nine percent versus the prior year.

SEE ALSO : Hermès announces financial results

Excluding the net impacts of foreign exchange, acquisitions and divestitures, organic sales also increased nine percent. Diluted net earnings per share were $1.63, an increase of 20% versus the prior year reported EPS and an increase of 19% versus the prior year Core EPS. On a currency-neutral basis, EPS increased 22% versus the prior year core results.

Operating cash flow was $4.7 billion for the quarter. Adjusted free cash flow productivity was 95%. The Company returned $4 billion of cash to shareholders via $2 billion of dividend payments and $2 billion of common stock repurchases.

“We delivered another strong quarter of organic sales growth, core earnings per share and cash returned to shareowners, enabling us to increase our outlook for fiscal year results,” said David Taylor, Chairman, President and Chief Executive Officer.

“Our near-term priorities continue to be employee health and safety, maximizing availability of P&G products for consumers around the world, and helping society meet the challenges of the COVID crisis. We remain firmly focused on executing our strategies of superiority, productivity, constructive disruption and improving P&G’s organization and culture to deliver balanced top-line and bottom-line growth along with strong cash generation,” continued David.

Net sales in the first quarter of fiscal year 2021 were $19.3 billion, a nine percent increase versus the prior year. Unfavorable foreign exchange negatively impacted sales by one percentage point for the quarter. Excluding the impacts of foreign exchange, acquisitions and divestitures, organic sales also increased nine percent, driven by a seven percent increase in organic shipment volume, one percentage point of increased pricing and one percentage point of positive mix impact. Positive mix was driven by the disproportionate growth of premium home, health and hygiene products and the North American business, driven in part by pandemic-related consumption and inventory increases.

Beauty segment organic sales increased seven percent versus year ago. Skin and Personal Care organic sales increased high single digits driven by innovation-led growth in North America and Greater China. North America Skin and Personal Care grew mid-teens behind the launch of Safeguard hand soap and hand sanitizer and premium innovations on Olay. Globally, Personal Cleansing grew over 30%, with double digit growth in every region. Greater China SK-II grew over 20% with strong domestic consumption trends. Hair Care organic sales increased high single digits led by strong demand in North America, Greater China and Latin America, with mid-single digit growth or better across each of P&G’s top hair care brands.

Grooming segment organic sales increased six percent versus year ago. Appliances organic sales increased more than 30% due to innovation, increased demand for dry shaving and styling products, and increased pricing. Shave Care organic sales were unchanged as high single digit growth in female blades & razors was offset by market softness in male blades & razors due to pandemic-related consumption decline.

Health Care segment organic sales increased 12% for the quarter. Oral Care organic sales increased mid-teens globally, with mid-single digit or better growth in each region driven by innovation, currency devaluation-related price increases and positive mix impacts. Personal Health Care organic sales increased high single digits primarily due to innovation and increased consumption, primarily in digestive and wellness.

Fabric and Home Care segment organic sales increased 14% for the quarter. Fabric Care organic sales increased high single digits driven by high teens growth in the North America region through new innovations, incremental brand communication, and disproportionate growth of premium forms like laundry unit dose and fabric enhancer beads. Home Care organic sales increased more than 30% driven by increases in consumer demand for home cleaning products during the pandemic, resulting in double digit growth in every region. Dish Care, Air Care, and Surface Care each grew 20% or more.

Baby, Feminine and Family Care segment organic sales increased four percent versus year ago. Family Care organic sales increased double digits primarily due to consumption increases driven by consumers spending more time at home during the pandemic. Feminine Care organic sales increased high single digits with innovation led growth in North America and Greater China and more than 20% growth in Adult Incontinence products. Baby Care organic sales decreased low single digits as low single digit growth in the North American region was more than offset by category contraction and increased competitive activity in other regions.

Diluted net earnings per share were $1.63, a 20% increase versus the prior year driven by the increase in net sales and an increase in operating margin. Diluted net earnings per share grew 19% versus the base period Core EPS due to non-core restructuring charges in the base period. Currency-neutral net EPS increased 22% versus the prior year core EPS.

Reported gross margin increased 170 basis points versus the prior year reported gross margin. Reported gross margin increased 140 basis points versus the prior year core gross margin due to 30 basis points of non-core restructuring charges in the base period. Unfavorable foreign exchange negatively impacted gross margin by 30 basis points. On a currency-neutral basis, reported gross margin increased 170 basis points versus the prior year core gross margin driven by 120 basis points of productivity savings, 70 basis points help from lower commodity cost, 40 basis points of pricing benefit and 20 basis points of fixed cost leverage, partially offset by 80 basis points of unfavorable product mix and other costs.

Selling, general and administrative expense (SG&A) as a percentage of sales decreased 160 basis points on a reported basis versus the prior year. SG&A as a percentage of sales decreased 170 basis points versus the prior year core SG&A due to lower non-core restructuring charges in the base period. Unfavorable foreign exchange negatively impacted SG&A by 10 basis points. On a currency-neutral basis, reported SG&A as a percentage of sales decreased 180 basis points versus the prior year core SG&A as 230 basis points of sales leverage benefit and 110 basis points of savings from overhead and marketing expenses were partially offset by 110 basis points of marketing reinvestments and 50 basis points of inflation and other impacts.

Operating profit margin increased approximately 320 basis points versus the base period reported operating margin and increased 300 basis points versus the base period core operating margin. Unfavorable foreign exchange negatively impacted operating margins by 50 basis points. On a currency-neutral basis, reported operating margin increased 350 basis points versus the prior year core operating margin, including total productivity cost savings of 230 basis points for the quarter.

P&G raised its outlook for fiscal 2021 all-in sales growth from a range of one to three percent to a range of three to four percent versus the prior fiscal year. The revised range includes an estimated one percent negative impact from foreign exchange. The Company raised its outlook for organic sales growth from a range of two to four percent to a range of four to five percent.

The Company said it now expects fiscal 2021 GAAP diluted net earnings per share growth in a range of four to nine percent versus fiscal 2020 GAAP EPS of $4.96. GAAP EPS guidance now includes non-core charges in the range of $0.15 to $0.20 per share from the early debt retirement project that was initiated earlier this month. P&G raised guidance for core earnings per share growth from a range of three to seven percent to a range of five to eight percent versus fiscal 2020 core EPS of $5.12. The Company said its current outlook includes headwinds of approximately $325 million after-tax from foreign exchange impacts and $50 million after-tax from higher freight costs. The outlook also includes an estimated $150 million after tax headwind for the combined impacts of higher interest expense and lower interest income. These headwinds should be partially offset by approximately $175 million after-tax benefit from lower commodity costs.

The Company is not able to reconcile its forward-looking non-GAAP cash flow measure without unreasonable efforts because the Company cannot predict the timing and amounts of discrete cash items, such as acquisitions, divestitures, or impairments, which could significantly impact GAAP results. The Company estimates fiscal 2021 adjusted free cash flow productivity to be around 95%.

SEE ALSO : VF announces financial results

P&G expects to pay approximately $8 billion in dividends in fiscal 2021. The Company increased its outlook for common stock repurchase from a range of $6 billion to $8 billion to a range of $7 billion to $9 billion in fiscal 2021. Combined, P&G now plans to return $15 billion to $17 billion of cash to shareholders in this fiscal year.

Follow Retail in Asia on Facebook, Twitter and LinkedIn.

Get our top stories delivered to your inbox:

 

Stay ahead
Subscribe for free!
Register now
Stay ahead