01—Abstract
Summary
Summary of the 8-K filed March 17, 2003. Cited figures are marked; the original filing is the authoritative source.
Procter & Gamble (NYSE: PG) issued a Regulation FD news release on March 17, 2003 raising its earnings guidance for the January to March 2003 quarter, citing solid volume growth and favorable exchange rates.
Management now expects volume growth of 6%a to 8% on top of a strong base period when volume grew 10%, with growth broad-based across global business units and geographies, led by the Health Care business and developing markets. The guidance also reflects a negative volume impact from the Jif and Crisco spin-off, completed at the end of May 2002. On the top line, excluding foreign exchange, sales are expected to grow in the mid single-digit range, with foreign exchange adding roughly 3% to 4% (one to two points above prior estimates).
Total sales growth is projected in the high single digits. Operating margin is expected to expand 20 to 50 basis points against a very strong prior-year base that rose 280 basis points. The most important figure for investors is core EPS growth (excluding restructuring charges) of 13%b to 14%, up from prior guidance of 11% to 13%, and at or above consensus estimates.
The filing is a brief, forward-looking update rather than a financial statement release, so the guidance is management's estimate and subject to the risks listed in the forward-looking statements, including competition, currency and commodity exposures, Latin American and Middle East instability, and realization of cost savings. Management (CEO A.G. Lafley and CFO Clayton Daley) was scheduled to present at the Merrill Lynch Consumer Products Conference on March 18, 2003.
02—Key points
Key Highlights
- Raised Q3 FY2003 (January to March 2003) core EPS growth guidance to 13% to 14%, up from 11% to 13%, and at or above consensus estimates.
- Expected volume growth of 6% to 8%, broad-based across global business units and geographies, with Health Care and developing markets leading.
- Expected high single-digit total sales growth: mid single-digit growth excluding FX, plus roughly 3% to 4% from favorable foreign exchange (1 to 2 points above prior estimates).
- Operating margin guided to expand 20 to 50 basis points, against a very strong prior-year base of 280 basis points of expansion.
- Volume growth is measured against a strong base period (10% volume growth last year) and includes the negative impact of the Jif and Crisco spin-off completed in May 2002.
- Management (CEO A.G. Lafley and CFO Clayton Daley) presented at the Merrill Lynch Consumer Products Conference on March 18, 2003, with a webcast available to investors.
- Forward-looking statements carry risks including competitive intensity, currency and commodity exposure, Latin American and Middle East instability, and cost-savings execution.
03—Questions
Frequently Asked Questions
How much did P&G raise its earnings guidance?
P&G raised its core earnings per share growth guidance for the January to March 2003 quarter to 13% to 14%, from the prior range of 11% to 13%. Core EPS excludes restructuring program charges. The company said the new range is at or above consensus estimates.
What drove the guidance increase?
P&G attributed the raise to solid volume growth across its business units and geographies, along with favorable exchange rates. Foreign exchange is now expected to add 3% to 4% to sales growth, one to two points above earlier estimates.
What is the expected sales and margin outlook?
Sales excluding foreign exchange are expected to grow in the mid single-digit range, and total sales growth is projected in the high single digits. Operating margin is expected to grow 20 to 50 basis points, against a prior-year base in which margins expanded 280 basis points.
Does the volume growth include any negative effects?
Yes. The volume figures include the current-year negative impact of the Jif and Crisco spin-off, which was completed at the end of May 2002. The growth is also measured against a strong prior-year base in which volume rose 10%.
Are these figures final, and what could cause results to differ?
The figures are management's forward-looking estimates for the quarter and are not final results. P&G cautions that actual results may differ materially due to factors such as competitive activity, achievement of cost and tax savings, currency and commodity exposures, regulatory and legal matters, emerging-market growth, and political or economic instability in Latin America, the Middle East, and Korea.
04—Continue