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Procter & Gamble’s Top Line Continues to Fall

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P&G’s fiscal 2015 sales analysis

As we discussed earlier, Procter & Gamble’s (PG), or P&G, revenue fell 9% to $17.8 billion in 4Q15. The reported revenue was negatively impacted by adverse foreign exchange movements and volume—a 9% and 3% fall, respectively. This was offset by a 3% average rise in the prices of products across the globe.

Net sales for full-year fiscal 2015 came in at $76.3 billion—a fall of 5% compared to the prior year. This included a -6% impact from foreign exchange. The volume fell 1% and pricing increased sales by 2% with higher pricing in all five business segments.

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P&G’s organic sales growth versus its peers

P&G’s organic sales for 4Q15 didn’t change. However, both Colgate-Palmolive (CL) and Kimberly-Clark’s (KMB) 2Q15 organic sales grew at ~4% each.

For fiscal 2015, P&G’s organic sales grew for all five segments except for the beauty, hair, and personal care segment. Overall, organic sales grew 1% for fiscal 2015. You’ll learn more about each segment’s performance later in the series. To learn more about P&G’s business, please read Procter & Gamble: Your Guide to the Largest Consumer Staples Firm.

Focus on profitable product categories

P&G’s focus is to reshape the company and refocus on ten product categories and 65 brands. This will best leverage its core competencies. It will help P&G’s brands gain leading global positions. It will impact the performance of the top line and the bottom line.

As a result, P&G is divesting its beauty brands in a merger with Coty (COTY). To learn more on the deal, read Coty Buys 43 Procter & Gamble Brands: What Investors Should Know.

Venezuela’s impact

P&G’s inability to convert currency or pay dividends has led the company to switch its accounting system. The company will stop consolidating the results of its local Venezuelan operations in its GAAP (generally accepted accounting principles) financial statements—effective June 30, 2015. Recently, Clorox (CLX) also discontinued its operations in Venezuela—effective September 22, 2014.

P&G has exposure to the SPDR Dow Jones Industrial Average (DIA). It accounts for 2.90%[1. Updated as of August 4, 2015] of the total weight of the portfolio.

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