10-QPeriod: Q1 FY2024

PROCTER & GAMBLE Co Quarterly Report for Q1 Ended Sep 30, 2023

Filed October 18, 2023For Securities:PG

Summary

Procter & Gamble (PG) reported a strong first quarter for fiscal year 2024, with net sales increasing by 6% year-over-year to $21.9 billion. This growth was primarily driven by a 7% increase in pricing, partially offset by a 1% decrease in unit volume and a 1% unfavorable foreign exchange impact. Organic sales, excluding these factors, grew by 7%. Net earnings saw a significant increase of 15% to $4.6 billion, resulting in a 17% rise in diluted Earnings Per Share (EPS) to $1.83, reflecting improved operating income and a reduced share count. The company demonstrated robust operational efficiency, with gross margin expanding by 460 basis points due to higher pricing, lower commodity costs, and manufacturing productivity savings. Despite increased marketing and overhead spending, leading to a higher SG&A as a percentage of net sales, the company managed to improve its overall operating margin. Strong performance was observed across most segments, with Health Care, Fabric & Home Care, and Baby, Feminine & Family Care showing double-digit net sales growth. The company also generated substantial operating cash flow of $4.9 billion and maintained a strong adjusted free cash flow productivity of 97%.

Financial Highlights

53 data points
Beta

Revenue

$21.87B

52.0% Gross Margin

Net Income

$4.52B

20.7% Net Margin

EPS (Diluted)

$1.83

Total Assets

$122.53B

Cash & Equivalents

$9.73B

Free Cash Flow

$3.98B

Financial Statements
Beta
Revenue$21.87B
Cost of Revenue$10.50B
Gross Profit$11.37B
SG&A Expenses$5.60B
Operating Income$5.77B
Interest Expense$225.00M
Net Income$4.52B
EPS (Basic)$1.89
EPS (Diluted)$1.83
Shares Outstanding (Basic)2.36B
Shares Outstanding (Diluted)2.48B

Key Highlights

  • 1Net sales increased 6% to $21.9 billion, driven by a 7% increase in pricing and a 7% organic sales growth.
  • 2Net earnings rose 15% to $4.6 billion, with diluted EPS up 17% to $1.83, benefiting from higher sales and improved operating margins.
  • 3Gross margin improved significantly by 460 basis points to 52.0%, attributed to pricing, lower commodity costs, and productivity gains.
  • 4Health Care, Fabric & Home Care, and Baby, Feminine & Family Care segments reported double-digit net sales growth.
  • 5Operating cash flow was strong at $4.9 billion, with adjusted free cash flow productivity at 97%, indicating efficient cash generation.
  • 6The company continues its commitment to returning capital to shareholders, with significant treasury stock purchases and dividend payments.

Frequently Asked Questions

Net sales increased by 6% to $21.9 billion, primarily driven by a 7% increase in pricing. While unit volume decreased by 1% and foreign exchange had a 1% unfavorable impact, organic sales grew by 7%, indicating strong underlying demand for P&G's products.

Procter & Gamble improved its gross margin by 460 basis points to 52.0%. This was achieved through a combination of higher pricing (330 basis points), lower commodity costs (160 basis points), and manufacturing productivity savings (150 basis points). While SG&A expenses increased as a percentage of net sales due to higher marketing and overhead costs, the overall operating income and net earnings still saw substantial growth.

The Health Care segment saw an 11% increase in net sales, Fabric & Home Care increased by 8%, and Baby, Feminine & Family Care grew by 5%. Notably, within these segments, Fabric & Home Care and Baby, Feminine & Family Care reported particularly strong net earnings growth of 34%.

The company generated strong operating cash flow of $4.9 billion and maintained high adjusted free cash flow productivity of 97%. P&G continues to return capital to shareholders through dividends and share repurchases, with plans to repurchase $5 to $6 billion in fiscal year 2024.