Summary
Procter & Gamble's (PG) Q3 FY14 report shows resilience with flat net sales year-over-year, reaching $20.6 billion. Despite a challenging foreign exchange environment, the company achieved a 3% increase in organic sales driven by a 3% rise in unit volume across most segments, with Fabric Care & Home Care showing particularly strong volume growth. While gross margins saw pressure due to unfavorable foreign exchange and product mix, this was partially offset by manufacturing cost savings. Significant reductions in Selling, General & Administrative (SG&A) expenses, largely from marketing spend cuts, contributed to a slight increase in operating income and a 2% rise in net earnings attributable to P&G shareholders, reaching $2.6 billion. For the nine-month period, net sales grew 1% to $64.0 billion, with organic sales up 3% and unit volume up 4%. Net earnings attributable to P&G declined 4% year-over-year to $9.1 billion, impacted by a significant decrease in other non-operating income, primarily due to the absence of prior year gains from divestitures and joint venture buyouts. However, core diluted EPS saw a modest 1% increase, reflecting management's focus on sustainable earnings. The company continues its productivity and cost savings program, investing in innovation and managing its brand portfolio, with a notable subsequent event announcing the sale of its Pet Care brands.
Financial Highlights
53 data points| Revenue | $19.64B |
| Cost of Revenue | $10.04B |
| Gross Profit | $9.60B |
| SG&A Expenses | $6.29B |
| Operating Income | $3.31B |
| Interest Expense | $180.00M |
| Net Income | $2.61B |
| EPS (Basic) | $0.94 |
| EPS (Diluted) | $0.90 |
| Shares Outstanding (Basic) | 2.71B |
| Shares Outstanding (Diluted) | 2.89B |
Key Highlights
- 1Net sales remained stable at $20.6 billion for the quarter, with organic sales growing 3% driven by a 3% increase in unit volume.
- 2Gross margin declined by 140 basis points to 48.4% due to unfavorable foreign exchange and product mix, partially offset by 200 basis points of manufacturing cost savings.
- 3SG&A expenses decreased by 5% to $6.5 billion, with SG&A as a percentage of net sales improving by 170 basis points, largely due to reduced marketing spending.
- 4Net earnings attributable to Procter & Gamble increased by 2% to $2.6 billion for the quarter.
- 5Diluted net earnings per share increased by 2% to $0.90, while core diluted EPS (excluding certain charges) rose 5% to $1.04.
- 6For the nine-month period, net sales increased 1% to $64.0 billion, while net earnings attributable to P&G decreased 4% to $9.1 billion.
- 7The company announced the pending sale of its Pet Care brands (IAMS®, EUKANUBA®, NATURA®) for $2.9 billion in cash, expected to close in H2 2014.