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P&G Earnings Exceed Expectations Amid Increasing Product Prices

By John F. Heerdink, Jr.

Procter & Gamble Company (PG) reported strong quarterly earnings and revenue exceeding market estimates as price hikes helped offset higher commodity and freight costs. Executives informed in the conference call that they already told retailers about the increase in fabric care products, like Tide detergent and Downy dryer sheets, expected to take effect Feb. 28. P&G is expected to raise prices on some of its health care products in mid-April. 

Highlights From Earnings:

  • Earnings per share of $1.66 were reported versus $1.65 expected.
  • Revenue of $20.95 billion was reported versus $20.34 billion expected.
  • P&G reported a fiscal second-quarter net income of $4.22 billion, or $1.66 per share, an increase from $3.85 billion, or $1.47 per share, a year earlier.
  • Net sales increased 6% to $20.95 billion, above expectations of $20.34 billion.
  • Organic revenue, stripping out the impact of foreign currency, divestitures, and acquisitions also increased 6% in the quarter.
  • P&G’s healthcare and fabric and home-care segments witnessed organic sales rise by 8%.
  • The more intense flu and cold season increased organic sales for its health-care business by 20% for the quarter, boosting demand for Vicks and ZzzQuil products.
  •  The oral care unit, which includes Oral-B toothbrushes and Crest toothpaste, witnessed a boost from price increases.
  • The pandemic saw an increase in demand for cleaning products. P&G’s fabric-care business saw double-digit growth, due to strong sales of fabric enhancers and laundry detergent pods.
  • The company’s grooming division, which includes Venus and Gillette, saw organic sales jump 5%.
  • Organic sales of the company’s baby, feminine, and family care segment also rose 5% in the quarter, mainly due to higher prices.
  • P&G’s beauty segment reported the smallest organic sales change for the quarter, rising just 2%. The company is looking to improve those results with three acquisitions in the unit over the last three months, with Farmacy Beauty, hair-care brand Ouai, and Tula Skincare.
  • For fiscal 2022, P&G is now calling for 3% to 4% sales growth, up from its prior forecast of 2% to 4%.
  • P&G is forecasting a $2.8 million headwind, or $1.10 per share, to its fiscal 2022 earnings compared with the year prior.

The Procter & Gamble Company (PG), a Dow 30 component, supplies branded consumer packaged goods to consumers across the globe.  To learn more about Procter & Gamble (PG) and to continue to track its progress please visit the Vista Partners Procter & Gamble Coverage Page

Vista Partners LLC (”Vista”) is a California Registered Investment Advisor based in San Francisco. Vista delivers timely and relevant insights via the website: www.vistapglobal.com with daily stories, weekly market updates, monthly macroeconomic newsletters, podcasts, & Vista’s proprietary equity and market research to help you stay informed and stay competitive. Vista’s mission is to invest partner capital while arming investors with a comprehensive global financial perspective across all market sectors. Vista also seeks to provide select issuers with actionable advice regarding fundamental development, corporate governance, and capital market directives. 

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(Read Original Story: P&G earnings top estimates as price hikes offset rising costs, company raises 2022 sales forecast in CNBC)


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