Summary
Procter & Gamble's first quarter fiscal year 2019 report shows stable net sales, with a 4% increase in organic sales driven by a 3% rise in unit volume and favorable pricing/mix across several segments, particularly Beauty and Fabric & Home Care. Despite a slight decrease in gross margin due to higher commodity costs, the company reported a significant 12% increase in net earnings, largely attributable to a lower effective tax rate resulting from the U.S. Tax Act and a one-time gain from the dissolution of the PGT Healthcare partnership. Diluted EPS saw a 15% increase, also benefiting from a reduced share count due to ongoing share repurchases. The company continued its focus on productivity and cost savings, incurring $137 million in restructuring charges during the quarter. While goodwill remains substantial, particularly in the Grooming segment, the company noted increased susceptibility to impairment risk for the Shave Care reporting unit and the Gillette brand due to competitive pressures and currency devaluations. P&G's strong operating cash flow and disciplined capital allocation, including significant dividend payments and share repurchases, underscore its commitment to returning value to shareholders.
Financial Highlights
53 data points| Revenue | $16.69B |
| Cost of Revenue | $8.48B |
| Gross Profit | $8.21B |
| SG&A Expenses | $4.65B |
| Operating Income | $3.55B |
| Interest Expense | $129.00M |
| Net Income | $3.20B |
| EPS (Basic) | $1.26 |
| EPS (Diluted) | $1.22 |
| Shares Outstanding (Basic) | 2.50B |
| Shares Outstanding (Diluted) | 2.61B |
Key Highlights
- 1Net sales remained flat at $16.7 billion, but organic sales grew by 4% year-over-year, indicating underlying business strength.
- 2Net earnings increased by 12% to $3.2 billion, primarily driven by a lower effective tax rate and a one-time gain from the dissolution of the PGT Healthcare partnership.
- 3Diluted EPS rose by 15% to $1.22, benefiting from increased net earnings and a reduction in outstanding shares through buybacks.
- 4Gross margin declined by 110 basis points primarily due to higher commodity costs, partially offset by cost savings initiatives.
- 5The company incurred $137 million in restructuring charges, part of ongoing productivity and cost-saving programs.
- 6Goodwill in the Shave Care and Gillette brand is noted as being more susceptible to impairment risk due to market challenges.
- 7Operating cash flow was strong at $3.6 billion, with a reported adjusted free cash flow of $2.7 billion and 95% productivity.