Procter & Gamble Beat Q4 2018 EPS Estimate, Challenges Persist



Quarter summary

Procter & Gamble (PG) reported a mixed fiscal fourth quarter (which ended June 30) results today. The company’s top line came almost at analysts’ expectations, and the company surpassed analysts’ earnings estimate. Including the reported quarter, Procter & Gamble has now beaten analysts’ earnings estimate in the past 13 quarters.

Procter & Gamble reported net sales of $16.5 billion, which were in line with analysts’ estimate and increased 2.6% YoY (year-over-year), reflecting improved volumes and favorable currency rates. However, organic sales growth remained low and increased 1.0% as lower pricing partially offset improved organic volumes.

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Kimberly-Clark (KMB) and Colgate-Palmolive (CL) also disappointed with their organic sales during their recently reported quarters. Kimberly-Clark’s organic sales remained flat, reflecting weak volumes and pricing. Meanwhile, Colgate-Palmolive’s organic sales inched up 0.5%, thanks to the slight improvement in volumes.

Consumer packaged goods companies are striving to increase pricing in order to offset the cost headwinds and support their organic sales growth rate. However, this strategy could adversely impact volumes amid a heightened competitive environment.

Procter & Gamble’s fiscal fourth quarter’s adjusted earnings jumped 10.6% to $0.94 per share and came in ahead of analysts’ estimate of $0.90. A lower adjusted effective tax rate, share repurchases, and improved volumes drove the company’s bottom line. However, increased packaging, manufacturing, and shipping costs remained a drag.

Going forward, adverse currency rates, lower net pricing, and cost headwinds are likely to restrict the top- and bottom-line growth rate for Procter & Gamble. However, an improvement in volumes, productivity savings, and lower taxes and as well as a lower outstanding share count are expected to support the sales and earnings growth rates.


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