01—Abstract
Summary
Summary of the 10-Q filed April 30, 2010. Cited figures are marked; the original filing is the authoritative source.
Procter & Gamble Co. reported solid results for the nine months ended March 31, 2010, demonstrating resilience in a challenging economic environment.
Net sales saw a 2% increase to $60.0 billiona, driven by a 3% rise in unit volume, indicating sustained consumer demand for its essential consumer goods. The company's strategic focus on core brands and product innovation appears to be paying off, with organic sales growing by 3%. While net earnings from continuing operations rose 5% to $8.8 billion, overall net earnings saw a 4% decrease to $10.6 billion, largely due to lower gains from discontinued operations compared to the prior year, primarily from the divestiture of the pharmaceuticals business.
Diluted Earnings Per Share (EPS) from continuing operations saw a healthy 7% increase to $2.82b, while Core EPS, which excludes certain charges, grew 10% to $2.96, highlighting the underlying strength of the core business. The company also generated substantial operating cash flow of $12.8 billion and free cash flow of $10.8 billion, underscoring its robust financial health and ability to return value to shareholders.
02—Key points
Key Highlights
- Net sales increased 2% to $60.0 billion for the nine months ended March 31, 2010, supported by a 3% increase in unit volume.
- Net earnings from continuing operations rose 5% to $8.8 billion, driven by sales growth and margin expansion.
- Diluted EPS from continuing operations grew 7% to $2.82, and Core EPS increased 10% to $2.96.
- Operating cash flow increased significantly by 29% to $12.8 billion for the nine-month period.
- Free cash flow was strong at $10.8 billion for the nine-month period, with productivity at 102% of net earnings.
- The company continues to manage its portfolio, with the divestiture of the global pharmaceuticals business completed in October 2009.
- Despite an increase in SG&A expenses as a percentage of net sales due to marketing investments and other operating expenses, gross margins saw improvement driven by cost savings and lower commodity costs.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2010, Procter & Gamble Co kept $0.13.
- Revenue$19.18B100.0%
- Cost of revenue−$9.22B48.1%
- Gross profit$9.95B51.9%
- Operating costs−$5.99B31.2%
- Operating income$3.97B20.7%
- Interest, other & tax−$1.38B7.2%
- Net income$2.58B13.5%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2010filed April 30, 2010Financial Statements
Q3 FY2010 against Q3 FY2009
| Line item | Q3 FY2010Q3 FY2009 | Change |
|---|---|---|
| Revenue | $19.18B$17.86B | +7.4% |
| Cost of Revenue | $9.22B$9.12B | +1.2% |
| Gross Profit | $9.95B$8.75B | +13.8% |
| SG&A Expenses | $5.99B$5.19B | +15.2% |
| Operating Income | $3.97B$3.55B | +11.7% |
| Interest Expense | $223.00M$337.00M | −33.8% |
| Net Income | $2.58B$2.61B | −1.1% |
| EPS (Basic) | $0.88$0.88 | 0.0% |
| EPS (Diluted) | $0.83$0.84 | −1.2% |
| Shares Outstanding (Diluted) | 3.10B3.10B | 0.0% |
05—Questions
Frequently Asked Questions
What was the primary driver of sales growth in the nine months ended March 31, 2010?
Sales growth was primarily driven by a 3% increase in unit volume across various segments, particularly in Household Care, Fabric Care, Home Care, Baby Care, and Family Care. This indicates sustained consumer demand for Procter & Gamble's core products.
Why did overall net earnings decrease despite growth in continuing operations?
The overall net earnings decreased by 4% due to a significant reduction in net earnings from discontinued operations compared to the prior year. This was primarily because the prior year included a large gain from the divestiture of the Folgers coffee business, while the current period's discontinued operations gain was mainly from the sale of the pharmaceuticals business, which was smaller.
How did the company manage its costs and margins?
The company improved its gross margin by 310 basis points due to manufacturing cost savings and lower commodity/energy costs. However, Selling, General & Administrative (SG&A) expenses increased as a percentage of net sales, mainly due to higher marketing investments and other operating expenses, including charges related to potential competition law fines and Venezuelan currency issues.
What is the company's financial health and liquidity position?
Procter & Gamble demonstrated strong financial health with robust operating and free cash flow generation. The company has substantial liquidity, supported by ongoing cash generation from operations and access to credit facilities, enabling it to manage debt and fund shareholder returns.
06—Continue