Procter & Gamble (P&G), the multinational consumer goods company, has released its quarterly earnings and revenue report for the fiscal second quarter of 2024. While the results were mixed, with revenue seeing a boost of 3% thanks to price hikes, the company’s outlook for adjusted earnings per share for the full year has been narrowed. Despite this, P&G’s shares rose by more than 4% in morning trading.
Earnings per share came in at $1.84 adjusted, surpassing the expected $1.70, while revenue reached $21.44 billion, slightly lower than the expected $21.48 billion. Net income attributable to the company for the second quarter was $3.47 billion, or $1.40 per share, down from $3.93 billion, or $1.59 per share, compared to the previous year.
One significant factor affecting P&G’s earnings was the write-down of its razor brand Gillette by $1.3 billion, as previously announced in December. The company also plans to incur up to $2.5 billion in charges over the next two fiscal years due to Gillette impairment charges and restructuring in certain markets such as Argentina and Nigeria.
Excluding the impacts of restructuring and intangible impairment, P&G earned $1.84 per share. Net sales increased by 3% to $21.44 billion, with organic revenue, which excludes acquisitions, divestitures, and foreign exchange impact, rising by 4% during the quarter.
However, P&G faced challenges in terms of product volumes. Despite implementing price increases on products like Charmin toilet paper and Downy fabric softener over the past two years, consumers reduced their purchases of P&G products. Overall volume remained flat for the quarter, with only the grooming business reporting volume growth.
While demand improved in North America and Western Europe, other markets experienced weaker demand. For instance, Greater China saw a 15% decline in organic sales, which executives attributed to a decrease in consumer confidence. The Middle East also saw weaker demand, although P&G hopes that recent tensions in the region will ease.
P&G’s grooming division, which includes Gillette, experienced a 1% increase in volume during the quarter. The beauty segment reported flat volume, particularly in China, where sales of the SK-II skin-care brand struggled. The fabric and home-care business also reported flat volume. The health-care division saw a decline in volume by 3%, mainly due to a delayed start to the cold and flu season affecting respiratory product sales.
The feminine, baby, and family care business witnessed a 2% decline in volume, driven by reduced demand for diapers and tampons. However, the family care segment, including Bounty paper towels, saw an increase in volume.
Looking ahead, P&G has adjusted its forecast for fiscal 2024. The company now expects core earnings per share growth of 8% to 9%, narrowing its previous range of 6% to 9%. However, unadjusted earnings per share are anticipated to be flat to down 1%, significantly lower than the previous range of 6% to 9% growth. P&G maintains its sales growth forecast of 2% to 4% for fiscal 2024.
Despite the mixed results, P&G’s shares rose by over 4% in morning trading, indicating investor confidence in the company’s ability to navigate challenges and deliver solid performance. As P&G continues to adapt to changing market conditions and consumer preferences, it remains focused on driving growth and maintaining its position as a leading player in the consumer goods industry.