10-QPeriod: Q2 FY2022

PROCTER & GAMBLE Co Quarterly Report for Q2 Ended Dec 31, 2021

Filed January 19, 2022For Securities:PG

Summary

Procter & Gamble Co. (PG) reported solid financial results for the quarter and six months ended December 31, 2021. Net sales increased by 6% for both periods, reaching $20.95 billion for the quarter and $41.29 billion for the six months. This growth was driven by a combination of increased unit volume and higher pricing across most of its segments. Despite an increase in commodity costs and unfavorable mix impacting gross margins, the company demonstrated effective cost management, with SG&A expenses as a percentage of net sales decreasing. Diluted EPS saw a notable increase of 13% for the quarter to $1.66 and 5% for the six months to $3.27, benefiting from increased net earnings and a reduction in outstanding shares. The company also generated strong operating cash flow of $9.8 billion for the six-month period, underscoring its financial health and ability to return value to shareholders.

Financial Highlights

53 data points
Beta

Revenue

$20.95B

49.1% Gross Margin

Net Income

$4.22B

20.2% Net Margin

EPS (Diluted)

$1.66

Total Assets

$121.42B

Cash & Equivalents

$11.54B

Free Cash Flow

$4.50B

Financial Statements
Beta
Revenue$20.95B
Cost of Revenue$10.66B
Gross Profit$10.29B
SG&A Expenses$5.12B
Operating Income$5.17B
Interest Expense$106.00M
Net Income$4.22B
EPS (Basic)$1.72
EPS (Diluted)$1.66
Shares Outstanding (Basic)2.41B
Shares Outstanding (Diluted)2.54B

Key Highlights

  • 1Net sales grew 6% year-over-year for both the three and six-month periods, reaching $20.95 billion and $41.29 billion, respectively.
  • 2Diluted EPS increased by 13% to $1.66 for the three months and 5% to $3.27 for the six months.
  • 3Gross margin declined due to increased commodity costs (400 bps for the quarter, 370 bps for the six months) and unfavorable mix, partially offset by higher pricing.
  • 4Operating income decreased by 4% for both periods, primarily due to the decline in gross margin.
  • 5Net earnings attributable to P&G increased by 10% to $4.22 billion for the quarter and 3% to $8.34 billion for the six months.
  • 6The company generated $9.8 billion in operating cash flow for the six months ended December 31, 2021, with adjusted free cash flow productivity at 99%.
  • 7Share repurchases totaled $7.5 billion in the six-month period, demonstrating a commitment to returning capital to shareholders.

Frequently Asked Questions

Procter & Gamble Co. experienced a robust 6% increase in net sales for the three months ended December 31, 2021, reaching $20.95 billion. This growth was attributed to a 3% rise in unit volume and a 3% increase from higher pricing, with no significant impact from foreign exchange or mix.

Profitability was impacted by a decrease in gross margin by 400 basis points for the quarter, largely due to a 400 basis-point increase in commodity costs and a 140 basis-point decline from unfavorable mix. However, these were partially offset by a 130 basis-point increase from higher pricing. SG&A expenses as a percentage of net sales decreased, helping to mitigate some of the pressure on operating income.

The company demonstrated strong cash generation, with $9.8 billion in operating cash flow for the six months ended December 31, 2021. Adjusted free cash flow productivity was 99%. During this period, the company spent $7.5 billion on treasury stock purchases and $4.4 billion on dividends, indicating a continued focus on returning capital to shareholders through share repurchases and dividend payments.

The filing mentions ongoing risks related to global economic volatility, changes in commodity prices and transportation costs, foreign exchange fluctuations, government policies, and the continued evolution of the COVID-19 pandemic. The company also noted that the Shave Care reporting unit and the Gillette indefinite-lived intangible asset are susceptible to future impairment risk under certain adverse conditions.