01—Abstract
Summary
Summary of the 10-K filed August 6, 2021. Cited figures are marked; the original filing is the authoritative source.
Procter & Gamble (PG) reported robust financial performance for the fiscal year ended June 30, 2021.
The company demonstrated strong top-line growth, with net sales increasing by 7% to $76.1 billiona, driven by a 3% increase in unit volume and favorable foreign exchange. This growth was broad-based across its segments, with Health Care and Fabric & Home Care segments showing double-digit net sales increases. Operating income grew by 15%, and net earnings increased by 10% to $14.4 billion, leading to a 11% rise in diluted earnings per share (EPS) to $5.50.
The company's strategic focus on product superiority, innovation, and productivity improvements continues to yield positive results. P&G's commitment to returning value to shareholders is evident through its consistent dividend payments, marking 65 consecutive years of increases, and significant share repurchases totaling $11 billionb in fiscal year 2021. The company's financial health remains strong, supported by substantial cash flow generation and disciplined cost management.
02—Key points
Key Highlights
- Net sales increased 7% to $76.1 billion, driven by a 3% increase in unit volume and a 1% favorable foreign exchange impact.
- Operating income rose 15% to $18.0 billion, reflecting strong sales growth and improved operating margins.
- Net earnings grew 10% to $14.4 billion, resulting in a 11% increase in diluted EPS to $5.50.
- Adjusted free cash flow was $15.8 billion, with an adjusted free cash flow productivity of 107%, demonstrating strong cash generation capabilities.
- The company returned $19.3 billion to shareholders through dividends ($8.3 billion) and share repurchases ($11.0 billion) in fiscal year 2021.
- P&G maintained strong market share positions across its key product categories, with notable gains in Health Care and Fabric & Home Care.
- The company continues to invest in innovation and productivity improvements, which are crucial for its long-term growth strategy.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Procter & Gamble Co kept $0.19.
- Revenue$76.12B100.0%
- Cost of revenue−$37.11B48.8%
- Gross profit$39.01B51.2%
- Operating costs−$21.02B27.6%
- Operating income$17.99B23.6%
- Interest, other & tax−$3.63B4.8%
- Net income$14.35B18.9%
04—Financials
Financial Highlights
Figures from 10-KFY2021filed August 6, 2021Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $76.12B$70.95B | +7.3% |
| Cost of Revenue | $37.11B$35.25B | +5.3% |
| Gross Profit | $39.01B$35.70B | +9.3% |
| R&D Expenses | $1.90B$1.80B | +5.6% |
| SG&A Expenses | $21.02B$19.99B | +5.2% |
| Operating Income | $17.99B$15.71B | +14.5% |
| Interest Expense | $502.00M$465.00M | +8.0% |
| Net Income | $14.35B$13.03B | +10.2% |
| EPS (Basic) | $5.69$5.13 | +10.9% |
| EPS (Diluted) | $5.50$4.96 | +10.9% |
| Shares Outstanding (Basic) | 2.47B2.49B | −0.9% |
| Shares Outstanding (Diluted) | 2.60B2.63B | −0.9% |
05—Questions
Frequently Asked Questions
What were the main drivers of Procter & Gamble's net sales growth in fiscal year 2021?
Net sales increased by 7% to $76.1 billion, primarily driven by a 3% increase in unit volume and a 1% favorable impact from foreign exchange. Pricing also contributed positively with a 1% increase. Organic sales, which exclude foreign exchange and acquisition/divestiture impacts, grew by 6%.
How did the company manage its costs and profitability?
Procter & Gamble improved its gross margin by 90 basis points to 51.2% due to manufacturing cost savings and higher pricing, partially offset by unfavorable product mix and commodity costs. Selling, general, and administrative expenses decreased as a percentage of net sales by 60 basis points to 27.6%, driven by overhead cost reductions and productivity savings. This led to a 150 basis point increase in operating margin to 23.6%.
What is the company's approach to returning capital to shareholders?
P&G returned $19.3 billion to shareholders in fiscal year 2021 through $8.3 billion in dividends and $11.0 billion in share repurchases. The company has a long history of increasing dividends, marking 65 consecutive years of dividend increases, demonstrating a commitment to shareholder returns.
How did the COVID-19 pandemic impact Procter & Gamble's business?
The company noted that the pandemic had a mixed impact but did not materially negatively affect consolidated net sales. Certain categories like fabric, home cleaning, and hygiene products saw increased demand, particularly in North America, due to changing consumer habits and pantry stocking. However, other markets and categories experienced negative impacts due to economic slowdowns and restricted consumer movements. P&G prioritized employee safety and product availability throughout the pandemic.
06—Continue