01—Abstract
Summary
Summary of the 10-Q filed May 1, 2009. Cited figures are marked; the original filing is the authoritative source.
Procter & Gamble (PG) reported its third quarter and nine-month results for fiscal year 2009, ending March 31, 2009.
For the quarter, net sales decreased by 8% to $18.4 billiona, impacted by an 8% unfavorable foreign exchange rate and a 5% decline in unit volume. Despite lower sales, diluted earnings per share (EPS) from continuing operations increased by 4% to $0.83, driven by a lower effective tax rate and cost-saving measures. The company also reported a gain from discontinued operations, primarily related to the divestiture of its coffee business.
For the nine-month period, net sales saw a slight decrease of 1% to $60.4 billionb, though organic sales grew by 3%. Net earnings significantly increased by 21% to $11.0 billion, largely due to a substantial gain from the divestiture of the Folgers coffee business. Diluted EPS for the nine months rose 27% to $3.46.
The company continued its share repurchase program and dividend payments, reflecting a commitment to shareholder returns amidst a challenging global economic environment. Management noted ongoing efforts to manage costs and adapt to market conditions, including currency fluctuations and a broader economic downturn.
02—Key points
Key Highlights
- Net sales for the third quarter decreased by 8% to $18.4 billion, primarily due to a 5% drop in unit volume and a significant 8% negative impact from foreign exchange rates.
- Diluted net earnings per share (EPS) from continuing operations increased by 4% to $0.83 for the quarter, despite lower sales, aided by a lower effective tax rate and cost management.
- For the nine months ended March 31, 2009, net sales decreased by 1% to $60.4 billion, but organic sales grew by 3%.
- Total net earnings for the nine-month period surged by 21% to $11.0 billion, significantly boosted by a $2.0 billion after-tax gain from the divestiture of the Folgers coffee business.
- Diluted EPS for the nine-month period increased by 27% to $3.46, reflecting the impact of the Folgers divestiture gain and ongoing share repurchases.
- Operating cash flow for the nine months was $9.9 billion, a decrease of 11% compared to the prior year, with free cash flow productivity at 71%.
- The company is subject to ongoing investigations into potential competition law violations in Europe, the outcome of which could materially impact future financial results.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2009, Procter & Gamble Co kept $0.15.
- Revenue$17.86B100.0%
- Cost of revenue−$9.12B51.0%
- Gross profit$8.75B49.0%
- Operating costs−$5.19B29.1%
- Operating income$3.55B19.9%
- Interest, other & tax−$940.0M5.3%
- Net income$2.61B14.6%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2009filed May 1, 2009Financial Statements
| Revenue | $17.86B |
| Cost of Revenue | $9.12B |
| Gross Profit | $8.75B |
| SG&A Expenses | $5.19B |
| Operating Income | $3.55B |
| Interest Expense | $337.00M |
| Net Income | $2.61B |
| EPS (Basic) | $0.88 |
| EPS (Diluted) | $0.84 |
| Shares Outstanding (Diluted) | 3.10B |
05—Questions
Frequently Asked Questions
What was the primary driver for the significant increase in net earnings for the nine-month period?
The substantial increase in net earnings for the nine-month period was primarily driven by a significant after-tax gain of $2.0 billion recognized from the divestiture of the company's coffee business (Folgers) in November 2008.
How did currency fluctuations impact PG's reported sales?
Currency fluctuations had a significant negative impact on PG's reported sales. For the third quarter, unfavorable foreign exchange reduced net sales by 8%. For the nine-month period, unfavorable foreign exchange reduced net sales by 3%. This was due to several foreign currencies weakening against the U.S. dollar.
What is the company's outlook or management's commentary on the current economic environment?
Management noted that the global economic downturn, credit crisis, and associated currency market volatility are expected to continue and negatively impact net sales for the remainder of the fiscal year and into the beginning of the next fiscal year. They are focused on managing costs and adapting to these challenging market conditions.
Are there any significant legal or regulatory matters that investors should be aware of?
Yes, the company is subject to ongoing investigations into potential competition law violations in Europe. While no significant formal claims have been made yet, the outcome of these investigations could result in substantial fines or other costs that may materially impact the company's income statement and cash flows in the period they are recognized and paid.
06—Continue