Procter & Gamble Beats Q3 Earnings Expectations, But Falls Short on Sales

PG Stock

Procter & Gamble (NYSE:PG) reported its Q3 fiscal 2024 results, with earnings surpassing the Consensus Estimate but sales falling short. While both sales and earnings improved year over year, the company’s organic sales saw growth, primarily driven by strong pricing and performance across segments.

Core earnings per share stood at $1.52, marking an 11% increase from the previous year’s $1.37. This exceeded the Consensus Estimate of $1.42. The growth in bottom-line results was attributed to sales growth, improved operating margin, and reduced shares outstanding. Currency-neutral net earnings per share rose by 18% year over year.

Net sales reached $20,195 million, up by 1% compared to the previous year, but they fell short of the Consensus Estimate of $20,483 million. Despite this, sales grew across all segments except for Baby, Feminine & Family Care, with currency negatively impacting net sales by 2%.

On an organic basis, excluding acquisitions, divestitures, and foreign exchange impacts, revenues improved by 3% year over year, driven by a 3% rise in pricing, while product mix and volume remained flat.

Sales increased by 2% year over year in segments like Beauty, Health Care, Fabric & Home Care, and Grooming, but declined by 2% in Baby, Feminine & Family Care. All segments reported growth in organic sales, except for Baby, Feminine & Family Care, which remained flat year over year.

Despite the strong bottom-line results, shares of the company fell by 1.5% in the pre-market session following the soft top-line results. Procter & Gamble’s stock has seen a 4.2% increase in the past year compared to the industry’s 1.1% growth.

In terms of margins, the core gross margin increased by 310 basis points year over year to 51.3%, driven by various factors including favorable currency rates, pricing gains, and productivity savings. Operating margin rose by 90 basis points to 22.1%, aided by favorable currency rates and gross productivity savings.

Procter & Gamble ended Q3 fiscal 2024 with strong financials, including $6,828 million in cash and cash equivalents, $24,253 million in long-term debt, and $50,333 million in total shareholders’ equity. Adjusted free cash flow productivity was 87% for the quarter.

For fiscal 2024, Procter & Gamble expects all-in sales growth of 2-4%, with organic sales anticipated to increase by 4-5%. Core EPS is projected to grow by 10-11% compared to the earlier forecast of 8-9%. Adjusted free cash flow productivity is estimated to be 90% for fiscal 2024, with dividend payments exceeding $9 billion and share repurchases of $5-$6 billion planned.

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About the author: Stephanie Bédard-Châteauneuf has over seven years of experience writing financial content for various websites. Over the years, Stephanie has covered various industries, with a primary focus on tech stocks, consumer stocks, market news, and personal finance. She has an MBA in finance.