01—Abstract
Summary
Summary of the 10-Q filed April 20, 2022. Cited figures are marked; the original filing is the authoritative source.
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 billiona, 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 billionb for the nine months and maintained high free cash flow productivity of 92%, underscoring its financial health and ability to return value to shareholders.
02—Key points
Key Highlights
- Net 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.
- Net earnings attributable to Procter & Gamble increased by 3% to $3.4 billion for the third quarter, demonstrating effective cost management amidst inflationary pressures.
- Diluted EPS grew by 6% to $1.33 for the third quarter, supported by higher net earnings and a reduction in weighted average shares outstanding.
- For 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.
- Gross margin declined by 400 basis points to 46.7% in the quarter, primarily due to a 410 basis-point increase in commodity costs.
- The 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%.
- Significant cost pressures from commodities and transportation impacted profitability, but were partially mitigated by pricing actions and productivity savings.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2022, Procter & Gamble Co kept $0.17.
- Revenue$19.38B100.0%
- Cost of revenue−$10.33B53.3%
- Gross profit$9.05B46.7%
- Operating costs−$5.03B26.0%
- Operating income$4.02B20.8%
- Interest, other & tax−$669.0M3.5%
- Net income$3.35B17.3%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2022filed April 20, 2022Financial Statements
Q3 FY2022 against Q3 FY2021
| Line item | Q3 FY2022Q3 FY2021 | Change |
|---|---|---|
| Revenue | $19.38B$18.11B | +7.0% |
| Cost of Revenue | $10.33B$8.92B | +15.7% |
| Gross Profit | $9.05B$9.19B | −1.4% |
| SG&A Expenses | $5.03B$5.40B | −6.9% |
| Operating Income | $4.02B$3.79B | +6.3% |
| Interest Expense | $109.00M$106.00M | +2.8% |
| Net Income | $3.35B$3.25B | +3.3% |
| EPS (Basic) | $1.37$1.30 | +5.4% |
| EPS (Diluted) | $1.33$1.26 | +5.6% |
| Shares Outstanding (Basic) | 2.40B2.46B | −2.4% |
| Shares Outstanding (Diluted) | 2.53B2.59B | −2.3% |
05—Questions
Frequently Asked Questions
What were the primary drivers of the sales growth in the third quarter?
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.
What is the impact of rising commodity costs on P&G's profitability?
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.
How is P&G managing its capital return to shareholders?
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.
What is the company's outlook regarding the Russia-Ukraine war?
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.
06—Continue