10-QPeriod: Q3 FY2022

PROCTER & GAMBLE Co Quarterly Report for Q3 Ended Mar 31, 2022

Filed April 20, 2022For Securities:PG

Summary

Procter & Gamble (PG) reported solid results for the third quarter and the first nine months of fiscal year 2022, demonstrating resilience in a challenging economic environment. Net sales for the quarter grew 7% to $19.4 billion, driven by a combination of higher pricing (5%), positive product mix (2%), and a 3% increase in unit volume, partially offset by a 3% negative impact from foreign exchange. The company saw broad-based strength across its segments, with Health Care, Fabric & Home Care, and Baby, Feminine & Family Care showing particularly strong performance. Despite significant headwinds from rising commodity and transportation costs, which impacted gross margins, P&G managed to increase net earnings attributable to the company by 3% to $3.4 billion for the quarter and $11.7 billion for the nine-month period. Diluted Earnings Per Share (EPS) also saw a healthy increase of 6% for the quarter and 5% for the nine-month period, aided by share repurchases. The company generated strong operating cash flow of $13.0 billion for the nine months and maintained high free cash flow productivity of 92%, underscoring its financial health and ability to return value to shareholders.

Financial Highlights

53 data points
Beta

Revenue

$19.38B

46.7% Gross Margin

Net Income

$3.35B

17.3% Net Margin

EPS (Diluted)

$1.33

Total Assets

$120.22B

Cash & Equivalents

$8.53B

Free Cash Flow

$2.50B

Financial Statements
Beta
Revenue$19.38B
Cost of Revenue$10.33B
Gross Profit$9.05B
SG&A Expenses$5.03B
Operating Income$4.02B
Interest Expense$109.00M
Net Income$3.35B
EPS (Basic)$1.37
EPS (Diluted)$1.33
Shares Outstanding (Basic)2.40B
Shares Outstanding (Diluted)2.53B

Key Highlights

  • 1Net sales increased by 7% to $19.4 billion for the third quarter, driven by a 5% increase in pricing and a 2% positive mix, with unit volume contributing 3% growth.
  • 2Net earnings attributable to Procter & Gamble increased by 3% to $3.4 billion for the third quarter, demonstrating effective cost management amidst inflationary pressures.
  • 3Diluted EPS grew by 6% to $1.33 for the third quarter, supported by higher net earnings and a reduction in weighted average shares outstanding.
  • 4For the nine-month period, net sales rose 6% to $60.7 billion, with organic sales up 7%, excluding the impact of foreign exchange and portfolio changes.
  • 5Gross margin declined by 400 basis points to 46.7% in the quarter, primarily due to a 410 basis-point increase in commodity costs.
  • 6The company generated strong operating cash flow of $13.0 billion for the nine months ended March 31, 2022, with adjusted free cash flow productivity at 92%.
  • 7Significant cost pressures from commodities and transportation impacted profitability, but were partially mitigated by pricing actions and productivity savings.

Frequently Asked Questions

Sales growth in the third quarter was primarily driven by a 5% increase in pricing and a 2% positive mix, supported by a 3% increase in unit volume. Unfavorable foreign exchange had a 3% negative impact.

Rising commodity and transportation costs significantly impacted P&G's gross margin, causing a 400 basis point decrease in the third quarter. The company is working to offset these costs through pricing actions and productivity improvements.

P&G generated $13.0 billion in operating cash flow for the first nine months and achieved 92% adjusted free cash flow productivity. The company returned cash to shareholders through $8.8 billion in treasury stock purchases and $6.5 billion in dividends during the nine-month period.

The war has negatively impacted operations in both Russia and Ukraine, accounting for a small percentage of consolidated net sales and assets. P&G has reduced its product portfolio in Russia and suspended new investments and promotional activities. Future impacts are difficult to predict due to ongoing uncertainty.