01—Abstract
Summary
Summary of the 10-Q filed April 24, 2013. Cited figures are marked; the original filing is the authoritative source.
Procter & Gamble's (PG) Q3 FY13 filing reported consistent net sales year-over-year at $20.6 billiona, with a 2% increase driven by a 2% rise in unit volume and modest price increases.
The company achieved a 6% increase in net earnings attributable to P&G, reaching $2.57 billionb, and a 7% rise in diluted EPS to $0.88. This growth was supported by an expanded gross margin due to manufacturing cost savings and higher pricing, alongside a reduced effective tax rate.
However, an after-tax charge of $236 millionc due to the devaluation of the Venezuelan currency negatively impacted results. Despite challenges like competitive pressures and currency fluctuations, the company maintained strong operating cash flow and is actively managing its portfolio through ongoing restructuring and cost-saving initiatives.
02—Key points
Key Highlights
- Net sales remained stable at $20.6 billion, with organic sales up 2% year-over-year.
- Net earnings attributable to P&G increased by 6% to $2.57 billion, and diluted EPS rose by 7% to $0.88.
- Gross margin improved by 50 basis points to 49.8% due to manufacturing cost savings and higher pricing.
- The effective tax rate on continuing operations decreased to 21.2%, aided by the Venezuelan currency devaluation and U.S. corporate tax law changes.
- The company recorded a $236 million after-tax charge due to the devaluation of the Venezuelan currency, impacting overall profitability.
- Operating cash flow for the nine-month period increased by 13% to $10.5 billion.
- Procter & Gamble is executing a productivity and cost savings plan, incurring $180 million in restructuring charges for the quarter.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2013, Procter & Gamble Co kept $0.13.
- Revenue$20.20B100.0%
- Cost of revenue−$10.34B51.2%
- Gross profit$9.86B48.8%
- Operating costs−$6.50B32.2%
- Operating income$3.36B16.6%
- Interest, other & tax−$795.0M3.9%
- Net income$2.57B12.7%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2013filed April 24, 2013Financial Statements
Q3 FY2013 against Q3 FY2012
| Line item | Q3 FY2013Q3 FY2012 | Change |
|---|---|---|
| Revenue | $20.20B$20.19B | +0.1% |
| Cost of Revenue | $10.34B$10.24B | +1.0% |
| Gross Profit | $9.86B$9.96B | −1.0% |
| SG&A Expenses | $6.85B$6.64B | +3.2% |
| Operating Income | $3.36B$3.30B | +1.9% |
| Interest Expense | $163.00M$179.00M | −8.9% |
| Net Income | $2.57B$2.41B | +6.4% |
| EPS (Basic) | $0.92$0.85 | +8.2% |
| EPS (Diluted) | $0.88$0.82 | +7.3% |
| Shares Outstanding (Diluted) | 2.93B2.94B | −0.2% |
05—Questions
Frequently Asked Questions
What was the impact of the Venezuelan currency devaluation on P&G's financial results?
The devaluation of the Venezuelan currency resulted in a significant after-tax charge of $236 million ($0.08 per share) in the third fiscal quarter. This charge impacted net earnings and diluted earnings per share, though it did not affect the organic sales growth rate. The company expects ongoing impacts and is working to mitigate them through pricing adjustments and operational efficiencies.
How did the company's segments perform in terms of sales and earnings?
For the three months ended March 31, 2013, sales performance varied by segment. Health Care saw an 8% increase, while Baby Care and Family Care grew 3%. Beauty and Grooming experienced slight decreases of 2%. Fabric Care and Home Care sales were flat. Net earnings generally followed sales trends, with Health Care showing a 20% increase and Baby Care and Family Care up 6%, while Fabric Care and Home Care saw a 3% decrease.
What is the status of P&G's restructuring and cost-saving initiatives?
Procter & Gamble is progressing with its productivity and cost savings plan, which aims to incur over $3.5 billion in restructuring costs over five years. For the quarter ended March 31, 2013, the company incurred $180 million in restructuring charges, primarily related to employee separations and asset write-downs. The company has surpassed its initial target for non-manufacturing overhead personnel reductions by the end of fiscal 2013.
How did P&G's core EPS differ from its reported diluted EPS?
Core EPS for the three months ended March 31, 2013, was $0.99, an increase of 5% from the prior year, while reported diluted EPS was $0.88, up 7%. The difference is due to adjustments made to exclude certain items not considered part of sustainable results, such as the Venezuelan balance sheet devaluation impact, impairment charges, and incremental restructuring charges. For the nine-month period, core EPS was $3.27 (up 8%), compared to reported diluted EPS of $3.22 (up 33%), with the difference attributed to the Venezuelan charge, a gain on the Iberian JV buyout, and prior year impairment charges.
06—Continue