10-K/APeriod: FY2020

PROCTER & GAMBLE Co Annual Report (Amendment), Year Ended Jun 30, 2020

Filed August 7, 2020For Securities:PG

Summary

Procter & Gamble's (PG) fiscal year 2020 10-K filing highlights a strong year with net sales increasing by 5% to $71.0 billion, driven by a 4% rise in unit volume. The company demonstrated significant operational improvement, with operating income soaring by 186% primarily due to the absence of prior year impairment charges, and net earnings attributable to Procter & Gamble growing by 234% to $13.0 billion. Diluted EPS saw a substantial increase of 247% to $4.96, with Core EPS growing a healthy 13% to $5.12. The company effectively managed its diverse product portfolio, with notable performance in Fabric & Home Care and Health Care segments showing strong sales and earnings growth. The COVID-19 pandemic had mixed effects, leading to increased demand for hygiene and cleaning products, while impacting certain discretionary categories and international markets. P&G successfully navigated these challenges, maintaining operational continuity and demonstrating resilience. The company also continued its commitment to shareholder returns, increasing its dividend and repurchasing shares. Key risks highlighted include international operations volatility, economic uncertainties, supply chain disruptions, and the ongoing need for innovation and adaptation to changing consumer habits and competitive landscapes. The company's strong liquidity position, supported by robust operating cash flow and access to credit markets, underpins its ability to manage these risks and pursue its strategic objectives.

Financial Highlights

57 data points
Beta

Revenue

$70.95B

50.3% Gross Margin

Net Income

$13.03B

18.4% Net Margin

EPS (Diluted)

$4.96

Total Assets

$120.70B

Cash & Equivalents

$16.18B

Free Cash Flow

$14.33B

Financial Statements
Beta
Revenue$70.95B
Cost of Revenue$35.25B
Gross Profit$35.70B
R&D Expenses$1.80B
SG&A Expenses$19.99B
Operating Income$15.71B
Interest Expense$465.00M
Net Income$13.03B
EPS (Basic)$5.13
EPS (Diluted)$4.96
Shares Outstanding (Basic)2.49B
Shares Outstanding (Diluted)2.63B

Key Highlights

  • 1Net sales increased by 5% to $71.0 billion, with unit volume up 4%.
  • 2Operating income increased by 186% to $15.7 billion, largely due to a significant reduction in prior year impairment charges.
  • 3Net earnings attributable to Procter & Gamble increased by 234% to $13.0 billion.
  • 4Diluted EPS rose by 247% to $4.96, while Core EPS grew by 13% to $5.12.
  • 5Fabric & Home Care and Health Care segments showed strong sales and earnings growth.
  • 6The company successfully managed the impacts of the COVID-19 pandemic, which led to increased demand for certain products while impacting others.
  • 7P&G increased its dividend by 6% and completed $7.4 billion in share repurchases during fiscal year 2020.

Frequently Asked Questions

The substantial increase in operating income and net earnings was primarily driven by the absence of the $8.3 billion goodwill and intangible asset impairment charge that impacted the Shave Care segment in fiscal year 2019. This comparison against a lower base period significantly boosted the year-over-year growth figures.

The COVID-19 pandemic had mixed impacts. It led to increased demand and consumption of essential products like health, hygiene, and home cleaning items, particularly in North America, contributing to sales growth in those categories. Conversely, it negatively impacted sales in certain discretionary product categories (like beauty and grooming) and in channels affected by restricted consumer movement and economic slowdowns, especially in international markets.

P&G's strategy focuses on serving consumers better than competitors in every category and country, aiming for balanced top- and bottom-line growth and strong cash generation. This involves winning with consumers through product superiority, innovation, and productivity improvements. The company returns value to shareholders through consistent dividend increases (64 consecutive years of increases) and share repurchases, funded by strong operating cash flows.

Key risks include challenges related to international operations (currency fluctuations, political instability, economic volatility), supply chain disruptions, managing commodity cost fluctuations, the need for continuous innovation to stay ahead of competitors and changing consumer habits, managing key customer relationships, protecting brand reputation, cybersecurity threats, and navigating evolving political and tax regulations globally.