P&G Reports Modest Q3 Growth Despite Economic Woes, Exceeds EPS Expectations

Despite market headwinds, Procter & Gamble (PG) reported a modest growth in its fiscal year 2024 third-quarter results. Net sales slightly increased by 1%, while organic sales grew by 3%. Notably, the diluted net earnings per share (EPS) surged by 11% to $1.52, surpassing expectations by $0.11. P&G maintained strong cash flow management and continued its tradition of shareholder returns through dividends and share repurchases. The company projects all-in sales growth in the range of 2% to 4% and diluted net earnings per share growth of 1% to 2% for fiscal 2024.

Procter & Gamble Reports Modest Growth in Fiscal Q3 Amidst Economic Challenges

January 25, 2023 - Cincinnati, Ohio

The Procter & Gamble Company (NYSE: PG) has released its financial results for the third quarter of fiscal year 2024, demonstrating a resilient business model in the face of challenging market conditions.

Slight Increase in Net Sales

The company's net sales marginally increased by 1% to reach $20.2 billion compared to the corresponding period in the previous fiscal year. This modest growth is attributed to the continued demand for P&G's essential consumer products.

Organic Sales Growth Driven by Pricing

Excluding the impact of foreign exchange fluctuations, acquisitions, and divestitures, organic sales grew by a more robust 3%. This growth was primarily driven by a 3% increase from higher pricing, while volume and product mix remained largely neutral during the quarter.

Robust Diluted Net Earnings per Share

Despite the moderate sales growth, the company's diluted net earnings per share (EPS) experienced a significant increase of 11% to $1.52, exceeding market expectations of $1.41. This growth is a reflection of both the increase in net sales and an improvement in core operating margin.

Strong Cash Flow Management

P&G maintained its strong cash flow management during the quarter, with operating cash flow reaching $4.1 billion and net earnings totaling $3.8 billion. The company continued its commitment to shareholder returns, distributing approximately $3.3 billion through dividends and share repurchases.

Resilient Business Model and Strategic Focus

Jon Moeller, Chairman of the Board, President, and Chief Executive Officer, attributed P&G's performance to its resilient business model and strategic focus on key categories of daily-use products where brand choice is driven by performance.

"Despite multiple headwinds, we delivered solid sales and strong earnings growth," Moeller stated. "Our commitment to an integrated strategy focusing on product superiority, productivity, constructive disruption, and an agile and accountable organization has enabled us to navigate challenging times effectively."

Surpassing EPS Expectations

P&G outperformed analysts' expectations in terms of diluted EPS, exceeding the estimated $1.41 by $0.11 or approximately 7.8%. This highlights the company's operational efficiency and cost management capabilities.

Slightly Lower than Expected Revenue

While P&G's net sales were closely aligned with the predicted $20.44 billion, at $20.2 billion, it fell slightly short of the market consensus. This variance can be attributed to the challenging macroeconomic environment and headwinds from foreign exchange fluctuations.

Fiscal 2024 Outlook

Looking ahead, P&G maintains its fiscal 2024 guidance, expecting all-in sales growth in the range of 2% to 4% compared to the previous year. Organic sales growth is projected to be between 4% to 5%. The company has raised its diluted EPS growth forecast to a range of 1% to 2% versus fiscal 2023 EPS of $5.90, up from an initial forecast of -1% to inline.

P&G anticipates facing headwinds from unfavorable foreign exchange rates and interest expenses but expects potential benefits from favorable commodity costs. The company remains focused on delivering shareholder value, with plans to pay over $9 billion in dividends and repurchase $5 to $6 billion of common shares in fiscal 2024.

"Our strong brands, superior products, and a highly efficient supply chain position us well for continued growth in the years to come," Moeller said. "We remain confident in our ability to adapt to changing market dynamics and deliver superior results for our shareholders."