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P&G earnings beat expectations as price increases, boosts its 2022 sales projection

By Ishika Dangayach on Jan 19, 2022 | 04:39 AM IST

P&G.PNG

Net sale increases by 6% to $20.95 billion

Baby, feminine, and family care division sales amplify by 5% 

Fabric and home care product sales improve by 7 %

Procter & Gamble (NYSE: PG) posted quarterly earnings on Wednesday that surpassed Wall Street projections due to higher prices and demand for products increased despite fears over surge in Covid-19 cases.  

Earnings per share: $1.66, compared to $1.65 anticipated, according to Refinitiv

Revenue: $20.95 billion vs the projected $20.34 billion

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The consumer goods behemoth announced a fiscal second-quarter net income of $4.22 billion, or $1.66 per share, up from $3.85 billion, or $1.47 per share, the previous year.

Net sales increased by 6% to $20.95 billion. Organic sales, which excludes the effects of foreign currency, acquisitions, and divestitures, increased by 6% in the second quarter. The rise in organic sales was driven by a 3% increase in shipping volumes and a 3% increase in pricing. 

Fabric and home care product sales, increased 7 % in the second quarter as a result of the fast spread of the Omicron coronavirus strain, which prompted customers to purchase more cleaning products. A more severe flu season also increased organic demand for personal health care products by 20%.

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Organic sales of the company's baby, feminine, and family care division increased by 5% in the second quarter, owing mostly to higher pricing while P&G's beauty business saw the weakest organic revenue change for the quarter, increasing by only 2%.

“We delivered very strong top-line growth and made sequential progress on earnings in the face of significant cost headwinds,” said Jon Moeller, President, and Chief Executive Officer, in a statement. “These results keep us on track to deliver our earnings outlook and to raise estimates for sales growth, cash productivity, and cash return to shareowners.

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Fiscal Year 2022 Outlook

P&G increased its forecast for fiscal 2022 all-in revenue growth from 2 to 4 % to 3 to 4 % against the previous fiscal year. The company has increased its organic sales growth forecast to 4 to 5 %, up from its prior forecast of 2% to 4%. 

P&G reaffirmed its forecast for fiscal 2022 GAAP diluted net earnings per share increase of 6 to 9 % against fiscal 2021 GAAP EPS of $5.50. 

The business expects to spend $2.3 billion after-tax in commodity expenses and $300 million after-tax in increased freight costs, up from $2.1 billion and $200 million, respectively, in the previous quarter. P&G expects a $2.8 million headwind, or $1.10 per share when combined with a $200 million blow from foreign currency.

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In fiscal 2022, the business aims to pay more than $8 billion in dividends and repurchase $9 billion to $10 billion in common stock.


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