P&G Roars - Shares Gain On Q2 Earnings Beat, Reiterates $9B Dividend Payout In FY24, Ups Outlook

Procter & Gamble Company PG reported second-quarter FY24 sales growth of 3% year-over-year to $21.441 billion, marginally missing the consensus of $21.47 billion.

Adjusted EPS of $1.84 beat the consensus of $1.70.

Organic sales increased by 4%, driven by a 4% increase from higher pricing, partially offset by a 1% decrease in organic shipment volumes. Mix had a neutral impact on sales for the quarter.

Segment Sales Growth YoY: Organic sales in the Beauty segment rose 1%, the Grooming segment gained 9%, Health Care increased 2%, Fabric & Home Care rose 6%, and Baby, Feminine & Family Care grew 3%.

Gross margin for the quarter increased 520 basis points versus the prior year, based on gross productivity savings, favorable commodity costs, and increased pricing.

The quarterly core operating margin increased by 400 basis points versus the prior year.

P&G held $7.89 billion in cash and equivalents as of December 31, 2023. Operating cash flow was $5.1 billion, and net earnings were $3.5 billion for the quarter. Adjusted free cash flow productivity was 95%.

The company returned $3.3 billion of cash to shareowners via approximately $2.3 billion of dividend payments and $1 billion of share repurchases.

Restructuring Charges Worth Billions Expected Ahead: In December last year, the company announced a limited market portfolio restructuring of its business operations, primarily in certain Enterprise Markets, including Argentina and Nigeria, to address challenging macroeconomic and fiscal conditions. 

As a result, it expects to record incremental restructuring charges of $1.0 to 1.5 billion after tax in the affected markets, which will be recognized in the fiscal years ending June 30, 2024, and 2025.

FY24 Outlook: The company expects core EPS of $6.37-$6.43 (prior view $6.25-$6.43) versus the $6.41 estimate. 

P&G maintained its guidance range for fiscal 2024 all-in sales growth to be in the range of 2%-4%. The company also maintained its outlook for organic sales growth in the range of 4%-5%. The street view for FY24 sales is pegged at $84.81 billion.

P&G continues to expect unfavorable foreign exchange rates, which will be a headwind of approximately $1 billion after tax. 

The company continues to expect tailwinds of approximately $800 million after tax due to favorable commodity costs for the fiscal year 2024.

P&G expects to pay more than $9 billion in dividends and to repurchase $5 to $6 billion of common shares in fiscal 2024.

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Price Action: PG shares are trading higher by 2.49% at $151.54 premarket on the last check Tuesday.