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Why Procter & Gamble Beat Fiscal 2Q17 Sales Estimates

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Ahead of expectations

Procter & Gamble (PG) reported sales of $16.9 billion for fiscal 2Q17, which ended on December 31, 2016. It beat consensus analysts’ sales estimate for fiscal 2Q17 by 0.49%. Out of the last ten quarters, the company beat analysts’ expectations four times. Just like fiscal 1Q17, the company’s fiscal 2Q17 sales were flat on a YoY (year-over-year) basis.

Sales in 2Q17

Procter & Gamble’s net sales remained flat at $16.9 billion in fiscal 2Q17. A 1% rise in volumes was offset by a 2% negative impact of foreign exchange fluctuations. Fluctuations in foreign currency have a major influence on the company’s results due to its presence in more than 180 countries. Pricing and product mix had a minimal impact on sales in the second quarter.

The company’s organic sales, which exclude the impact of acquisitions and divestitures and currency fluctuations, rose 2% primarily due to higher organic volume. The company’s organic sales growth was negatively impacted by one percentage point from portfolio rationalization initiatives, lower finished product sales to the company’s Venezuelan operations, demonetization of Indian currency, and a tough macroeconomic environment in certain markets such as Nigeria, Egypt, Turkey, Russia, the United Kingdom, Mexico, and Argentina.

In the 2Q17 conference call, Procter & Gamble’s CFO Jon R. Moeller stated that the company experienced higher organic sales in 11 out of 15 of its key markets. The company also delivered organic sales growth in nine out of its ten product categories.

Comparison with peers

Procter & Gamble’s peers haven’t announced their quarterly results yet for the quarter ending on December 31, 2016.

Colgate-Palmolive (CL) will announce its 4Q16 results on January 27, 2017. Analysts expect sales of $3.9 billion—growth of -0.8% in 4Q16.

Clorox (CLX) is expected to announce its fiscal 2Q17 results on February 3, 2017. Clorox’s fiscal 2Q17 revenue is expected to grow 4.4% to $1.4 billion on a YoY basis. Kimberly-Clark (KMB) is scheduled to declare its fiscal 4Q16 results on January 24, 2017. Analysts expect the company’s sales to rise 0.22% to $4.6 billion.

We’ll discuss Procter & Gamble’s segments in the next part of this series.

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