01—Abstract
Summary
Summary of the 8-K filed March 19, 2002. Cited figures are marked; the original filing is the authoritative source.
On March 19, 2002, Procter & Gamble filed a Regulation FD 8-K to disclose a mid-quarter update on its third quarter of fiscal 2002 (the quarter ending March 2002).
The company said it now expects earnings growth for the quarter to exceed its prior guidance, driven by strong volume and cost performance. Core earnings per share growth is expected to reach double digits and beat current Wall Street analyst estimates. The company notes that this comparison is after adjusting the prior-year base for comparable goodwill and intangible asset accounting.
On the top line, volume growth is expected to rise 9%a to 10%, helped by the Clairol acquisition and strong performance in health care, fabric and home care, and the Chinese operation. Excluding acquisitions and divestitures, volume growth is forecast in the mid-single-digit range. Sales excluding foreign exchange are expected to grow in the high-single digits, while foreign exchange is expected to reduce reported sales by about 3%, mainly due to a weaker euro, Argentine peso and yen.
Operating margins are also expected to beat previous guidance, aided by improved profitability in fabric and home care. For full fiscal 2002, P&G said it remains comfortable with its previously issued guidance. Core EPS growth is expected to exceed last year's rate but still fall short of the company's long-term double-digit target, and sales growth excluding currency is expected to be faster than last year but below the 4%b to 6% long-term target.
The company also flagged that the planned spin-merger of its Jif and Crisco brands into J.M. Smucker is expected to dilute EPS in the final quarter of the fiscal year.
02—Key points
Key Highlights
- Q3 FY2002 (March 2002 quarter) earnings growth now expected to exceed prior guidance, with core EPS growth at the double-digit level and above current Wall Street estimates
- Volume growth forecast to rise 9% to 10%, boosted by the Clairol acquisition; organic volume growth expected in the mid-single-digit range
- Sales excluding foreign exchange expected to grow in the high-single-digit range, with currency headwinds of about 3% to the top line
- Operating margins expected to exceed prior guidance, supported by strong profitability gains in the fabric and home care business unit
- Full-year fiscal 2002 guidance reaffirmed: core EPS growth above last year's rate but below the long-term double-digit target; sales growth ex-FX faster than last year but below the 4% to 6% target
- Full-year FX expected to reduce top-line growth by about 2%, reflecting weakness in the euro, yen and Argentine peso
- Planned Jif and Crisco spin-merger with J.M. Smucker expected to dilute EPS in the fiscal fourth quarter
03—Questions
Frequently Asked Questions
Is P&G raising its earnings outlook for the March 2002 quarter?
Yes. P&G said it expects earnings growth for the quarter to exceed its prior guidance, with core EPS growth at the double-digit level and above current Wall Street analyst estimates. The company attributed the improvement to strong volume growth and cost reductions, despite negative foreign exchange effects. The comparison is made after adjusting the base period for comparable goodwill and intangible asset accounting.
What is driving P&G's volume growth this quarter?
Total volume growth is expected to be 9% to 10%, lifted by the Clairol acquisition and strong performance in the health care, fabric and home care business units, and in the company's Chinese operation. Excluding the effects of acquisitions and divestitures, volume growth is expected to be in the mid-single-digit range.
How is currency affecting P&G's results?
Foreign exchange is expected to reduce sales growth by about 3% in the quarter, due to weakness in the euro, the Argentine peso and the yen. For fiscal 2002 as a whole, currency is expected to reduce top-line growth by about 2%. Despite this, the company said cost reductions and volume gains are supporting earnings growth.
Has P&G changed its full-year fiscal 2002 outlook?
No. P&G said it remains comfortable with the fiscal 2002 guidance it previously provided. Core EPS growth is expected to exceed last year's rate but not yet reach the long-term double-digit target. Sales growth excluding FX is expected to be faster than last year but below the 4% to 6% long-term target.
Will the Jif and Crisco transaction affect P&G's earnings?
The planned spin-merger of the Jif and Crisco brands into J.M. Smucker is expected to dilute earnings per share in the final quarter of fiscal 2002. P&G said this impact is included in its full-year fiscal 2002 estimates.
04—Continue