01—Abstract
Summary
Summary of the 10-Q filed January 19, 2022. Cited figures are marked; the original filing is the authoritative source.
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 billiona 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 $1.66b 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.
02—Key points
Key Highlights
- Net sales grew 6% year-over-year for both the three and six-month periods, reaching $20.95 billion and $41.29 billion, respectively.
- Diluted EPS increased by 13% to $1.66 for the three months and 5% to $3.27 for the six months.
- Gross 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.
- Operating income decreased by 4% for both periods, primarily due to the decline in gross margin.
- Net 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.
- The 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%.
- Share repurchases totaled $7.5 billion in the six-month period, demonstrating a commitment to returning capital to shareholders.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2022, Procter & Gamble Co kept $0.20.
- Revenue$20.95B100.0%
- Cost of revenue−$10.66B50.9%
- Gross profit$10.29B49.1%
- Operating costs−$5.12B24.4%
- Operating income$5.17B24.7%
- Interest, other & tax−$945.0M4.5%
- Net income$4.22B20.2%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2022filed January 19, 2022Financial Statements
Q2 FY2022 against Q2 FY2021
| Line item | Q2 FY2022Q2 FY2021 | Change |
|---|---|---|
| Revenue | $20.95B$19.75B | +6.1% |
| Cost of Revenue | $10.66B$9.25B | +15.2% |
| Gross Profit | $10.29B$10.49B | −1.9% |
| SG&A Expenses | $5.12B$5.11B | +0.2% |
| Operating Income | $5.17B$5.38B | −3.9% |
| Interest Expense | $106.00M$143.00M | −25.9% |
| Net Income | $4.22B$3.89B | +8.6% |
| EPS (Basic) | $1.72$1.53 | +12.4% |
| EPS (Diluted) | $1.66$1.47 | +12.9% |
| Shares Outstanding (Basic) | 2.41B2.48B | −2.5% |
| Shares Outstanding (Diluted) | 2.54B2.62B | −2.7% |
05—Questions
Frequently Asked Questions
How did the company's top-line performance fare in this quarter?
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.
What are the key drivers impacting the company's profitability?
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.
How is the company managing its capital and returning value to shareholders?
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.
Are there any significant risks or uncertainties highlighted in the filing?
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.
06—Continue