Why Gillette Parent P&G's Stock Is Taking A Hit Today

Procter & Gamble Company PG said in an exchange filing that it expects to record charges worth $2 billion to $2.5 billion after-tax due to restructuring its business operations and an impairment charge from Gillette asset writedown.

The restructuring is done primarily in certain Enterprise Markets, including Argentina and Nigeria, to address challenging macroeconomic and fiscal conditions.

The company expects to record incremental restructuring charges of $1.0 billion-$1.5 billion after tax, including foreign currency translation losses to be recognized upon the substantial liquidation of operations in the affected markets.

The company expects to recognize these restructuring charges in the fiscal years ending June 30, 2024, and 2025, with initial charges recognized in the quarter ending December 31, 2023.

The consumer goods corporation announced that it would incur a pre-tax noncash impairment charge of $1.3 billion in its current quarter, which concludes on December 31, related to intangible assets acquired as part of The Gillette Company.

The impairment charge arises from a reduction in the estimated fair value of the Gillette indefinite-lived intangible asset due to a higher discount rate, weakening of several currencies relative to the U.S. dollar, and the impact of the restructuring program.

Procter & Gamble, having acquired Gillette in 2005 for $57 billion, derives approximately 8% of its overall revenue from its grooming segment, Reuters reported.

During a Morgan Stanley conference on Tuesday, P&G's Chief Financial Officer Andre Schulten anticipated a growth rate of around 5% for its Gillette division, consistent with its performance over the past three years, the report read.

Previously, in 2019, P&G had to write down $8 billion from the value of this unit, primarily due to currency exchange rate impacts, it added.

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Price Action: PG shares are trading lower by 2.78% to $147.84 on the last check Tuesday.

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