Summary
Procter & Gamble's (PG) Q3 FY12 filing shows a mixed financial performance. While net sales saw a modest increase driven by price hikes and growth in developing markets, net earnings experienced a significant decline. This decrease was primarily attributed to substantial goodwill and intangible asset impairment charges totaling $1.6 billion, largely affecting the Appliances and Salon Professional businesses, as well as incremental restructuring costs associated with a new productivity and cost savings plan. Despite these headwinds, the company continues to generate strong operating cash flow and maintain a healthy free cash flow productivity of 92%. The company is actively managing its portfolio, evidenced by the agreement to divest its global snacks business. Investors should note the impact of rising commodity costs on gross margins and the company's ongoing efforts to offset these pressures through pricing and cost-saving initiatives.
Financial Highlights
51 data points| Revenue | $20.19B |
| Cost of Revenue | $10.24B |
| Gross Profit | $9.96B |
| SG&A Expenses | $6.64B |
| Operating Income | $3.30B |
| Interest Expense | $179.00M |
| Net Income | $2.41B |
| EPS (Basic) | $0.85 |
| EPS (Diluted) | $0.82 |
| Shares Outstanding (Diluted) | 2.94B |
Key Highlights
- 1Net sales increased by 2% for the quarter and 5% year-to-date, driven by price increases and growth in developing regions, though unit volume growth was modest.
- 2Net earnings attributable to Procter & Gamble decreased significantly by 16% for the quarter and 23% year-to-date.
- 3The company recorded substantial goodwill and intangible asset impairment charges of $1.6 billion, primarily impacting the Appliances and Salon Professional businesses.
- 4A new productivity and cost savings plan was announced, expecting to incur approximately $3.5 billion in restructuring costs over four years.
- 5Operating cash flow remained robust at $9.3 billion for the nine months ended March 31, 2012, with a free cash flow productivity of 92%.
- 6The agreement to divest the global snacks business to The Kellogg Company for $2.7 billion was announced, with the business reported as discontinued operations.
- 7Gross margin contracted by 150 basis points for the quarter and 190 basis points year-to-date, primarily due to higher commodity and energy costs.