P&G Announces Third Quarter Earnings

Actualizado: 30 Nov 2023, 12:52 PM EST Publicado: 26 Abr 2017, 04:53 AM EDT

Net Sales -1%; Organic Sales +1%; Diluted Net
EPS $0.93, -4%; Core EPS $0.96, +12%

CINCINNATI–(BUSINESS WIRE)–The Procter & Gamble Company (NYSE:PG) reported third quarter fiscal
year 2017 net sales of $15.6 billion, a decrease of one percent versus
the prior year. Organic sales increased one percent. Organic sales
increased in four of five business segments. Diluted net earnings per
share were $0.93, a decrease of four percent versus the prior year while
core earnings per share increased 12% to $0.96. Currency-neutral core
EPS increased 15% versus the prior year.

Operating cash flow was $3.0 billion for the quarter. Adjusted free cash
flow productivity was 90%. The Company returned $1.8 billion of cash to
shareholders as dividends and repurchased $2.0 billion of common stock.
Earlier this month, P&G announced an increase in its quarterly dividend,
marking the 61^st consecutive year the Company has increased
its dividend. P&G has been paying a dividend for 127 consecutive years
since its incorporation in 1890.

“The third quarter macro environment was characterized by a slowdown in
market growth, continued geopolitical disruptions and foreign exchange
challenges,” said David Taylor, Chairman, President and Chief Executive
Officer. “Against this backdrop, we delivered modest organic sales
growth and double-digit Core EPS growth, and we increased the quarterly
dividend for the 61^st consecutive year. Looking forward, we
are maintaining our organic sales and Core EPS guidance ranges for the
year and increasing our outlook for adjusted free cash flow
productivity.”

January – March Quarter Discussion

Net sales in the third quarter of fiscal year 2017 were $15.6 billion, a
decrease of one percent versus prior year, including a negative two
percent impact from foreign exchange. Organic sales increased one
percent driven by a one percent increase in organic shipment volume.
Pricing and mix had no net impact on sales for the quarter. All-in
volume was unchanged including the impacts of minor brand divestitures.


January – March 2017		Foreign					Organic	Organic
Net Sales Drivers*	Volume	Exchange	Price	Mix	Other**	Net Sales	Volume	Sales
Beauty	(2)%	(1)%	1%	—%	—%	(2)%	—%	1%
Grooming	—%	—%	(2)%	(4)%	—%	(6)%	—%	(6)%
Health Care	4%	(1)%	1%	1%	(1)%	4%	4%	6%
Fabric & Home Care	—%	(2)%	—%	—%	1%	(1)%	1%	1%
Baby, Feminine & Family Care	1%	(1)%	—%	—%	(1)%	(1)%	1%	1%
Total P&G	—%	(2)%	—%	—%	1%	(1)%	1%	1%

* Net sales percentage changes are approximations based on quantitative
formulas that are consistently applied.
** Other includes the sales
mix impact from acquisitions/divestitures and rounding impacts necessary
to reconcile volume to net sales.

Beauty segment organic sales increased one percent versus year ago
behind growth in Skin & Personal Care. Organic sales increased low
single digits in Skin & Personal Care as the continued growth of the
super-premium SK-II skin care brand offset lower volume in retail skin
care. Organic sales in Hair Care were unchanged.
Grooming segment organic sales decreased six percent due to lower
volume and reduced pricing in Shave Care. Organic sales decreased high
single digits globally in Shave Care due to competitive impacts in the
U.S. Organic sales were up high single digits in Appliances driven by
the continued success of innovation on Braun male shavers as well as
styling tools.
Health Care segment organic sales increased six percent behind higher
organic volume in both Oral Care and Personal Health Care. Product
innovation on power toothbrushes and continued marketing support drove
a low single-digit increase in organic sales in Oral Care while
Personal Health Care was up double digits due to market growth in the
U.S. behind a strong cough & cold season along with increased pricing
outside the U.S.
Fabric and Home Care segment organic sales increased one percent
versus year ago driven by higher organic volume in both Fabric Care
and Home Care along with increased pricing in Fabric Care. Home Care
organic sales decreased low single digits as increased volume due to
product innovation and increased customer support was more than offset
by unfavorable geographic mix. Fabric Care organic sales increased low
single digits due to increased organic volume and favorable product
mix from premium forms in developed markets and increased pricing in
developing markets.
Baby, Feminine and Family Care segment organic sales increased one
percent driven by volume growth in Family Care and favorable mix in
Feminine Care. Baby Care organic sales decreased low single digits due
mainly to competitive activity. Feminine Care organic sales increased
mid-single digits from favorable product mix due to Always Discrete
premium innovation. Family Care organic sales grew low single digits
driven primarily by product innovation and increased marketing support.

Diluted net earnings per share were $0.93, a decrease of four percent
versus the prior year. Diluted net earnings per share from continuing
operations were also $0.93, which is an increase of 15% versus the base
period. Current year results included non-core restructuring charges of
$0.03 per share. Core earnings per share, which exclude non-core
restructuring charges, were $0.96, an increase of 12% versus the prior
year. Currency-neutral core earnings per share increased 15% for the
quarter.

Reported gross margin was unchanged, including a 40 basis point decrease
in non-core restructuring charges versus the prior year. Core gross
margin decreased 40 basis points, including 20 basis points of negative
foreign exchange impacts. On a currency-neutral basis, core gross margin
decreased 20 basis points as 210 basis points of productivity savings
were more than offset by 100 basis points of unfavorable geographic and
product mix, 80 basis points of commodity cost increases and 50 basis
points of product reinvestments and other impacts.

Selling, general and administrative expense (SG&A) as a percent of sales
decreased 40 basis points on a reported basis versus the prior year,
including a 10 basis point net benefit from a year-on-year decline in
non-core charges. Core SG&A as a percentage of sales decreased 30 basis
points versus the prior year. Savings of 50 basis points from overhead
and marketing productivity and a 110 basis point benefit in other
operating income were partially offset by a 130 basis point impact from
investments in marketing, sales resources, and research and development.

Reported operating profit margin increased 40 basis points. Core
operating profit margin decreased 10 basis points versus the prior year,
including 20 basis points of foreign exchange impacts. On a
currency-neutral basis, core operating profit margin increased 10 basis
points including productivity cost savings of 260 basis points for the
quarter.

Fiscal Year 2017 Guidance

P&G said it is maintaining its guidance for organic sales growth in the
range of two to three percent for fiscal 2017. Fiscal year to date, the
Company is at the low end of this range. The Company expects the
combined headwinds of foreign exchange and minor brand divestitures to
reduce sales growth by two to three percentage points. As a result, P&G
estimates all-in sales to be down one percent to in-line with the prior
fiscal year.

The Company also maintained its expectation for core earnings per share
growth of mid-single digits versus fiscal 2016 Core EPS of $3.67. All-in
GAAP earnings per share are expected to increase 48% to 50% versus
fiscal year 2016 GAAP EPS of $3.69. The fiscal 2017 GAAP EPS estimate
includes approximately $0.12 per share of non-core restructuring costs
and $0.13 per share of charges related to early debt retirement that was
executed in the second quarter. Also included in GAAP EPS is the $1.95
gain from the divestiture of 41 Beauty Brands to Coty in a transaction
that was completed in the second quarter.

P&G said it is increasing fiscal year guidance for adjusted free cash
flow productivity from 90% or more to approximately 95%.

Forward-Looking Statements

Certain statements in this release or presentation, other than purely
historical information, including estimates, projections, statements
relating to our business plans, objectives, and expected operating
results, and the assumptions upon which those statements are based, are
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995, Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
These forward-looking statements generally are identified by the words
“believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,”
“strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,”
“would,” “will be,” “will continue,” “will likely result,” and similar
expressions. Forward-looking statements are based on current
expectations and assumptions, which are subject to risks and
uncertainties that may cause results to differ materially from those
expressed or implied in the forward-looking statements. We undertake no
obligation to update or revise publicly any forward-looking statements,
whether because of new information, future events or otherwise.

Risks and uncertainties to which our forward-looking statements are
subject include, without limitation: (1) the ability to successfully
manage global financial risks, including foreign currency fluctuations,
currency exchange or pricing controls and localized volatility; (2) the
ability to successfully manage local, regional or global economic
volatility, including reduced market growth rates, and to generate
sufficient income and cash flow to allow the Company to effect the
expected share repurchases and dividend payments; (3) the ability to
manage disruptions in credit markets or changes to our credit rating;
(4) the ability to maintain key manufacturing and supply arrangements
(including sole supplier and sole manufacturing plant arrangements) and
to manage disruption of business due to factors outside of our control,
such as natural disasters and acts of war or terrorism; (5) the ability
to successfully manage cost fluctuations and pressures, including
commodity prices, raw materials, labor costs, energy costs and pension
and health care costs; (6) the ability to stay on the leading edge of
innovation, obtain necessary intellectual property protections and
successfully respond to technological advances attained by, and patents
granted to, competitors; (7) the ability to compete with our local and
global competitors in new and existing sales channels, including by
successfully responding to competitive factors such as prices,
promotional incentives and trade terms for products; (8) the ability to
manage and maintain key customer relationships; (9) the ability to
protect our reputation and brand equity by successfully managing real or
perceived issues, including concerns about safety, quality, ingredients,
efficacy or similar matters that may arise; (10) the ability to
successfully manage the financial, legal, reputational and operational
risk associated with third party relationships, such as our suppliers,
contractors and external business partners; (11) the ability to rely on
and maintain key information technology systems and networks (including
Company and third-party systems and networks) and maintain the security
and functionality of such systems and networks and the data contained
therein; (12) the ability to successfully manage regulatory and legal
requirements and matters (including, without limitation, those laws and
regulations involving product liability, intellectual property,
antitrust, privacy, tax, accounting standards and environmental) and to
resolve pending matters within current estimates; (13) the ability to
manage changes in applicable tax laws and regulations; (14) the ability
to successfully manage our portfolio optimization strategy, including
achieving and maintaining our intended tax treatment of the related
transactions, and our ongoing acquisition, divestiture and joint venture
activities, in each case to achieve the Company’s overall business
strategy and financial objectives, without impacting the delivery of
base business objectives; (15) the ability to successfully achieve
productivity improvements and cost savings and manage ongoing
organizational changes, while successfully identifying, developing and
retaining particularly key employees, especially in key growth markets
where the availability of skilled or experienced employees may be
limited; and (16) the ability to manage the uncertain implications of
the United Kingdom’s withdrawal from the European Union. For additional
information concerning factors that could cause actual results and
events to differ materially from those projected herein, please refer to
our most recent 10-K, 10-Q and 8-K reports.

About Procter & Gamble

P&G serves consumers around the world with one of the strongest
portfolios of trusted, quality, leadership brands, including Always®,
Ambi Pur®, Ariel®, Bounty®, Charmin®, Crest®, Dawn®, Downy®, Fairy®,
Febreze®, Gain®, Gillette®, Head & Shoulders®, Lenor®, Olay®, Oral-B®,
Pampers®, Pantene®, SK-II®, Tide®, Vicks®, and Whisper®. The P&G
community includes operations in approximately 70 countries worldwide.
Please visit http://www.pg.com
for the latest news and information about P&G and its brands.


THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
(Amounts in Millions Except Per Share Amounts)
Consolidated Earnings Information

	Three Months Ended March 31								Nine Months Ended March 31
	2017			2016			% Chg		2017			2016			% Chg
NET SALES	$	15,605		$	15,755		(1	)%	$	48,979		$	49,197		—	%
Cost of products sold	7,836			7,915			(1	)%	24,236			24,527			(1	)%
GROSS PROFIT	7,769			7,840			(1	)%	24,743			24,670			—	%
Selling, general and administrative expense	4,409			4,522			(2	)%	13,737			13,731			—	%
OPERATING INCOME	3,360			3,318			1	%	11,006			10,939			1	%
Interest expense	96			146			(34	)%	349			429			(19	)%
Interest income	46			33			39	%	123			135			(9	)%
Other non-operating income/(loss), net	26			21			24	%	(450		)	38			N/A
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	3,336			3,226			3	%	10,330			10,683			(3	)%
Income taxes on continuing operations	780			889			(12	)%	2,338			2,664			(12	)%
NET EARNINGS FROM CONTINUING OPERATIONS	2,556			2,337			9	%	7,992			8,019			—	%
NET EARNINGS FROM DISCONTINUED OPERATIONS	—			446			(100	)%	5,217			627			N/A
NET EARNINGS	2,556			2,783			(8	)%	13,209			8,646			53	%
Less: Net earnings attributable to noncontrolling interests	34			33			3	%	98			89			10	%
NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE	$	2,522		$	2,750		(8	)%	$	13,111		$	8,557		53	%

EFFECTIVE TAX RATE	23.4		%	27.6		%			22.6		%	24.9		%

BASIC NET EARNINGS PER COMMON SHARE:*
Earnings from continuing operations	$	0.96		$	0.83		16	%	$	2.95		$	2.86		3	%
Earnings from discontinued operations	$	—		$	0.17		(100	)%	$	2.00		$	0.23		770	%
BASIC NET EARNINGS PER COMMON SHARE	$	0.96		$	1.00		(4	)%	$	4.95		$	3.09		60	%
DILUTED NET EARNINGS PER COMMON SHARE:*
Earnings from continuing operations	$	0.93		$	0.81		15	%	$	2.87		$	2.78		3	%
Earnings from discontinued operations	$	—		$	0.16		(100	)%	$	1.89		$	0.22		759	%
DILUTED NET EARNINGS PER COMMON SHARE	$	0.93		$	0.97		(4	)%	$	4.76		$	3.00		59	%
DIVIDENDS PER COMMON SHARE	$	0.6695		$	0.6630				$	2.0085		$	1.9890
Diluted weighted average common shares outstanding	2,705.5			2,835.0					2,755.4			2,855.6

							Basis Pt								Basis Pt
COMPARISONS AS A % OF NET SALES							Chg								Chg
Gross Margin	49.8%			49.8%			—		50.5%			50.1%			40
Selling, general and administrative expense	28.3%			28.7%			(40)		28.0%			27.9%			10
Operating Margin	21.5%			21.1%			40		22.5%			22.2%			30
Earnings from continuing operations before income taxes	21.4%			20.5%			90		21.1%			21.7%			(60)
Net earnings from continuing operations	16.4%			14.8%			160		16.3%			16.3%			—
Net earnings attributable to Procter & Gamble	16.2%			17.5%			(130)		26.8%			17.4%			940

* Basic net earnings per common share and Diluted net earnings per
common share are calculated on Net earnings attributable to Procter &
Gamble.


THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
(Amounts in Millions)
Consolidated Earnings Information

	Three Months Ended March 31, 2017
			% Change		Earnings/(Loss) from		% Change		Net Earnings/(Loss)		% Change
			Versus Year		Continuing Operations		Versus Year		from Continuing		Versus Year
	Net Sales		Ago		Before Income Taxes		Ago		Operations		Ago
Beauty	$	2,675	(2	)%	$	531	(12	)%	$	396	(14	)%
Grooming	1,525		(6	)%	437		(7	)%	333		(6	)%
Health Care	1,841		4	%	470		14	%	310		12	%
Fabric & Home Care	4,957		(1	)%	972		(4	)%	599		(8	)%
Baby, Feminine & Family Care	4,471		(1	)%	890		(9	)%	555		(12	)%
Corporate	136		28	%	36		N/A		363		N/A
Total Company	$	15,605	(1	)%	$	3,336	3	%	$	2,556	9	%


	Three Months Ended March 31, 2017
	(Percent Change vs. Year Ago)*
	Volume with	Volume Excluding
	Acquisitions &	Acquisitions &	Foreign				Net Sales
	Divestitures	Divestitures	Exchange	Price	Mix	Other**	Growth
Beauty	(2)%	—%	(1)%	1%	—%	—%	(2)%
Grooming	—%	—%	—%	(2)%	(4)%	—%	(6)%
Health Care	4%	4%	(1)%	1%	1%	(1)%	4%
Fabric & Home Care	—%	1%	(2)%	—%	—%	1%	(1)%
Baby, Feminine & Family Care	1%	1%	(1)%	—%	—%	(1)%	(1)%
Total Company	—%	1%	(2)%	—%	—%	1%	(1)%


	Nine Months Ended March 31, 2017
			% Change		Earnings/(Loss) from			% Change		Net Earnings/(Loss)		% Change
			Versus Year		Continuing Operations			Versus Year		from Continuing		Versus Year
	Net Sales		Ago		Before Income Taxes			Ago		Operations		Ago
Beauty	$	8,613	(1	)%	$	2,028		(8	)%	$	1,528	(8	)%
Grooming	4,972		(3	)%	1,580			2	%	1,217		3	%
Health Care	5,774		4	%	1,574			10	%	1,052		6	%
Fabric & Home Care	15,529		(1	)%	3,226			(3	)%	2,052		(6	)%
Baby, Feminine & Family Care	13,711		(1	)%	2,973			(5	)%	1,932		(6	)%
Corporate	380		17	%	(1,051		)	N/A		211		N/A
Total Company	$	48,979	—	%	$	10,330		(3	)%	$	7,992	—	%


	Nine Months Ended March 31, 2017
	(Percent Change vs. Year Ago)*
	Volume with	Volume Excluding
	Acquisitions &	Acquisitions &	Foreign				Net Sales
	Divestitures	Divestitures	Exchange	Price	Mix	Other**	Growth
Beauty	(2)%	1%	(2)%	1%	1%	1%	(1)%
Grooming	1%	2%	(2)%	—%	(2)%	—%	(3)%
Health Care	4%	5%	(2)%	1%	1%	—%	4%
Fabric & Home Care	1%	2%	(2)%	(1)%	1%	—%	(1)%
Baby, Feminine & Family Care	2%	3%	(2)%	(1)%	(1)%	1%	(1)%
Total Company	1%	2%	(2)%	—%	—%	1%	—%


THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
(Amounts in Millions Except Per Share Amounts)
Consolidated Statements of Cash Flows

	Nine Months Ended March 31
^{Amounts in millions}	2017				2016
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	$	7,102			$	6,836
OPERATING ACTIVITIES
Net earnings	13,209				8,646
Depreciation and amortization	2,100				2,239
Loss on early extinguishment of debt	543				—
Share-based compensation expense	197				216
Deferred income taxes	(382		)		(428		)
Loss/(gain) on sale of assets	(5,452		)		241
Goodwill and intangible asset impairment charges	—				450
Changes in:
Accounts receivable	(159		)		(129		)
Inventories	(145		)		(94		)
Accounts payable, accrued and other liabilities	(1,113		)		(199		)
Other operating assets and liabilities	219				167
Other	48				187
TOTAL OPERATING ACTIVITIES	9,065				11,296
INVESTING ACTIVITIES
Capital expenditures	(2,230		)		(2,023		)
Proceeds from asset sales	411				114
Acquisitions, net of cash acquired	(16		)		(186		)
Purchases of short-term investments	(3,369		)		(2,372		)
Proceeds from sales and maturities of short-term investments	834				1,222
Pre-divestiture addition of restricted cash related to the Beauty Brands divestiture	(874		)		(995		)
Cash transferred at closing related to the Beauty Brands divestiture	(475		)		—
Release of restricted cash upon closing of the Beauty Brands divestiture	1,870				—
Cash transferred in Batteries divestiture	—				(143		)
Change in other investments	26				—
TOTAL INVESTING ACTIVITIES	(3,823		)		(4,383		)
FINANCING ACTIVITIES
Dividends to shareholders	(5,410		)		(5,589		)
Change in short-term debt	3,556				1,535
Additions to long-term debt	2,641				3,916
Reductions of long-term debt	(5,020		)	⁽¹⁾	(2,210		)
Treasury stock purchases	(4,504		)		(3,504		)
Shares exchanged in Batteries divestiture	—				(1,730		)
Impact of stock options and other	2,398				2,024
TOTAL FINANCING ACTIVITIES	(6,339		)		(5,558		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	(188		)		(296		)
CHANGE IN CASH AND CASH EQUIVALENTS	(1,285		)		1,059
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	5,817			$	7,895

⁽¹⁾ Includes $543 of costs related to early extinguishment of
debt.


THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
(Amounts in Millions Except Per Share Amounts)
Condensed Consolidated Balance Sheets

	March 31, 2017		June 30, 2016
Cash and cash equivalents	$	5,817	$	7,102
Available-for-sale investment securities	8,510		6,246
Accounts receivable	4,358		4,373
Inventories	4,754		4,716
Deferred income taxes	—		1,507
Prepaid expenses and other current assets	2,446		2,653
Current assets held for sale	—		7,185
TOTAL CURRENT ASSETS	25,885		33,782
Property, plant and equipment, net	19,219		19,385
Goodwill	43,682		44,350
Trademarks and other intangible assets, net	24,153		24,527
Other noncurrent assets	5,152		5,092
TOTAL ASSETS	$	118,091	$	127,136

Accounts payable	$	8,076	$	9,325
Accrued and other liabilities	7,225		7,449
Current liabilities held for sale	—		2,343
Debt due within one year	13,781		11,653
TOTAL CURRENT LIABILITIES	29,082		30,770
Long-term debt	16,633		18,945
Deferred income taxes	8,644		9,113
Other noncurrent liabilities	9,184		10,325
TOTAL LIABILITIES	63,543		69,153
TOTAL SHAREHOLDERS’ EQUITY	54,548		57,983
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	118,091	$	127,136

The Procter & Gamble Company

Exhibit 1: Non-GAAP Measures

In accordance with the SEC’s Regulation G, the following provides
definitions of the non-GAAP measures used in Procter & Gamble’s
April 26, 2017 earnings release and the reconciliation to the most
closely related GAAP measure. We believe that these measures provide
useful perspective on underlying business trends (i.e., trends excluding
non-recurring or unusual items) and results and provide a supplemental
measure of year-on-year results. The non-GAAP measures described below
are used by management in making operating decisions, allocating
financial resources and for business strategy purposes. These measures
may be useful to investors as they provide supplemental information
about business performance and provide investors a view of our business
results through the eyes of management. These measures are also used to
evaluate senior management and are a factor in determining their at-risk
compensation. These non-GAAP measures are not intended to be considered
by the user in place of the related GAAP measure, but rather as
supplemental information to our business results. These non-GAAP
measures may not be the same as similar measures used by other companies
due to possible differences in method and in the items or events being
adjusted.

The Core earnings measures included in the following reconciliation
tables refer to the equivalent GAAP measures adjusted as applicable for
the following items:

Incremental restructuring: The Company has
had and continues to have an ongoing level of restructuring activities.
Such activities have resulted in ongoing annual restructuring related
charges of approximately $250 – $500 million before tax. Beginning in
2012 Procter & Gamble began a $10 billion strategic productivity and
cost savings initiative that includes incremental restructuring
activities. This results in incremental restructuring charges to
accelerate productivity efforts and cost savings.

Contacts

P&G Media Contacts:
Damon
Jones, 513-983-0190
Jennifer Corso, 513-983-2570
or
P&G
Investor Relations Contact:
John Chevalier,
513-983-9974

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