Summary
Procter & Gamble's (PG) third quarter of fiscal year 2015 (ending December 31, 2014) shows a decline in net sales and earnings compared to the prior year. Net sales decreased by 4% to $20.2 billion, impacted by unfavorable foreign exchange rates which reduced sales by 5%. While unit volume remained flat overall, organic sales grew by 2%, indicating underlying business strength driven by pricing and product/geographic mix. The most significant factor affecting the bottom line was a substantial net loss from discontinued operations, primarily due to a $740 million non-cash impairment charge related to the Batteries business divestiture. This led to a reported net loss attributable to Procter & Gamble of $2.4 billion for the quarter, a sharp decline from the previous year. Excluding discontinued operations and certain other items, core earnings per share also saw a decrease, reflecting the ongoing challenges in the global economic environment and strategic portfolio adjustments.
Financial Highlights
54 data points| Revenue | $18.50B |
| Cost of Revenue | $9.56B |
| Gross Profit | $8.94B |
| SG&A Expenses | $5.36B |
| Operating Income | $3.58B |
| Interest Expense | $160.00M |
| Net Income | $2.37B |
| EPS (Basic) | $0.85 |
| EPS (Diluted) | $0.82 |
| Shares Outstanding (Basic) | 2.71B |
| Shares Outstanding (Diluted) | 2.89B |
Key Highlights
- 1Net sales decreased by 4% to $20.2 billion for the quarter, with organic sales growing by 2%.
- 2The company recorded a net loss of $577 million from discontinued operations, largely due to a $740 million impairment charge related to the Batteries business.
- 3Net earnings attributable to Procter & Gamble decreased significantly by 31% to $2.4 billion due to the discontinued operations loss.
- 4Diluted EPS from continuing operations declined 9% to $1.02, while overall diluted EPS fell 31% to $0.82.
- 5Gross margin decreased by 40 basis points, impacted by higher commodity costs and unfavorable foreign exchange, partially offset by manufacturing cost savings and higher pricing.
- 6The company continues its portfolio optimization, with the divestiture of the Batteries business (Duracell) to Berkshire Hathaway expected in the second half of calendar 2015.
- 7Significant foreign exchange headwinds impacted net sales and earnings, with unfavorable currency movements reducing net sales by 5% and net earnings by approximately $450 million for the quarter.