Gillette Parent Procter & Gamble Grows Q3 Margins Despite Flat Revenue, Raises Annual Profit Outlook

Procter & Gamble Co PG reported third-quarter FY24 sales growth of 1% year-on-year to $20.195 billion, missing the analyst consensus estimate of $20.408 billion.

Organic sales increased 3%, driven by a 3% increase from higher pricing. Sales in the Beauty segment rose 2%, the Grooming segment gained 3%, and Health Care increased 2%.

Adjusted EPS of $1.52 beat the consensus estimate of $1.41.

Gross profit increased 7% Y/Y to $10.3 billion. The reported gross margin increased by 300 basis points to 51.2%.

Operating margin expanded 90 basis points to 22.1%, while operating income for the quarter rose 5% to $4.46 billion.

P&G held $6.83 billion in cash and equivalents as of March 31, 2024. Operating cash flow for the quarter was $4.1 billion.

The company returned over $3.3 billion of value to shareholders in the quarter via $2.3 billion in dividend payments and $1 billion of share repurchases.

“We delivered solid sales and strong earnings growth in the third quarter despite multiple headwinds, enabling us to raise our EPS growth guidance and maintain our top-line outlook for the fiscal year,” said Board Chairman, President, and CEO Jon Moeller.

Outlook: P&G maintained its guidance range for FY24 organic sales growth of 4%-5% and all-in sales growth of 2%-4%. P&G raised its FY24 EPS growth outlook from -1% to inline to a range of 1% to 2% versus FY23 EPS of $5.90.

P&G raised its adjusted EPS growth outlook from 8%-9% to 10%-11% versus the prior year. P&G now expects unfavorable foreign exchange rates will be a headwind of approximately $600 million after tax.

P&G now expects a benefit of approximately $900 million after tax from favorable commodity costs for fiscal year 2024.

P&G sees a core effective tax rate of 20% to 21% in fiscal 2024. P&G also expects to pay over $9 billion in dividends and repurchase $5 billion-$6 billion of common shares in fiscal 2024.

Price Action: PG shares are trading lower by 1.30% at $155.24 in premarket on the last check Friday.

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