01—Abstract
Summary
Summary of the 10-K filed August 7, 2017. Cited figures are marked; the original filing is the authoritative source.
Procter & Gamble's (PG) 2017 10-K filing highlights a year of strategic portfolio reshaping, marked by the divestiture of approximately 100 non-strategic brands to focus on a core portfolio of 65 brands where P&G holds leading market positions.
This strategic shift, particularly the significant Beauty Brands divestiture, contributed to a substantial increase in reported net earnings. Despite flat net sales, organic sales saw a 2%a increase driven by volume growth. The company demonstrated strong operational execution with improved gross margins, driven by manufacturing cost savings, and a reduction in SG&A as a percentage of net sales.
P&G continued its commitment to shareholder returns, increasing its dividend for the 61st consecutive year, underscoring its long-standing dividend history. Operationally, P&G reported stable net sales, with organic sales growth reflecting a 2%b increase in volume. The company's diverse segment performance showed resilience, with notable growth in Fabric & Home Care and Baby, Feminine & Family Care, while Beauty experienced a volume decline offset by favorable mix.
Key financial metrics show continued focus on productivity and cash generation, with adjusted free cash flow productivity at 94%c. The company maintained strong liquidity and credit ratings, positioning it well for future operations and investments despite facing global economic uncertainties and foreign exchange headwinds.
02—Key points
Key Highlights
- Completed strategic portfolio reshaping by divesting approximately 100 non-strategic brands, streamlining focus to 65 core brands.
- Reported flat net sales of $65.1 billion, with organic sales growing 2% driven by a 1% increase in unit volume.
- Net earnings attributable to Procter & Gamble increased significantly by 46% to $15.3 billion, largely due to a $5.3 billion gain on the sale of Beauty Brands.
- Diluted net earnings per share from continuing operations increased 6% to $3.69, while Core EPS grew 7% to $3.92.
- Maintained a strong dividend payout history, increasing the quarterly dividend to $0.6896 per share, marking the 61st consecutive annual increase.
- Adjusted free cash flow productivity remained strong at 94%.
- Operated with effective internal controls over financial reporting, as confirmed by independent auditors.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, Procter & Gamble Co kept $0.24.
- Revenue$65.06B100.0%
- Cost of revenue−$32.53B50.0%
- Gross profit$32.52B50.0%
- Operating costs−$18.76B28.8%
- Operating income$13.77B21.2%
- Interest, other & tax$1.56B2.4%
- Net income$15.33B23.6%
04—Financials
Financial Highlights
Figures from 10-KFY2017filed August 7, 2017Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $65.06B$65.30B | −0.4% |
| Cost of Revenue | $32.53B$32.91B | −1.1% |
| Gross Profit | $32.52B$32.39B | +0.4% |
| R&D Expenses | $1.90B$1.90B | 0.0% |
| SG&A Expenses | $18.65B$18.95B | −1.6% |
| Operating Income | $13.77B$13.44B | +2.4% |
| Interest Expense | $465.00M$579.00M | −19.7% |
| Net Income | $15.33B$10.51B | +45.9% |
| EPS (Basic) | $5.80$3.80 | +52.6% |
| EPS (Diluted) | $5.59$3.69 | +51.5% |
| Shares Outstanding (Basic) | 2.60B2.70B | −3.7% |
| Shares Outstanding (Diluted) | 2.74B2.84B | −3.7% |
05—Questions
Frequently Asked Questions
What was the impact of the Beauty Brands divestiture on P&G's financial results?
The divestiture of Beauty Brands significantly boosted P&G's reported net earnings, contributing a gain of $5.3 billion after tax in fiscal year 2017. This strategic move was part of a broader effort to streamline the company's brand portfolio.
How did P&G's sales perform in fiscal year 2017?
Net sales were relatively flat at $65.1 billion. However, organic sales grew by 2%, driven by a 1% increase in unit volume, indicating underlying business strength despite some currency headwinds and portfolio changes.
What is P&G's approach to shareholder returns?
P&G continues to demonstrate a strong commitment to shareholder returns. In fiscal year 2017, the company increased its quarterly dividend for the 61st consecutive year and has a long history of consistent dividend payments. Share repurchases also remain a key component of its capital allocation strategy.
What are the key risks facing P&G?
Key risks include fluctuations in foreign currency exchange rates, global economic conditions impacting consumer demand, intense competition, commodity price volatility affecting costs, and the need for continuous product innovation and effective marketing to maintain market share. Supply chain disruptions and geopolitical instability in international markets also pose risks.
06—Continue