P&G Q3 Results Top View; Backs FY22 Core EPS Outlook

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Consumer goods giant Procter & Gamble Co. (PG) reported on Wednesday that profit for the third quarter increased three percent from last year, driven by net sales growth across all its operating segments, partially offset by a slight reduction in operating margin.

Both earnings per share and revenues for the quarter beat analysts' estimates. Looking ahead, the company confirmed its core earnings guidance for the full-year 2022, but raised annual revenue growth outlook.

"We delivered another quarter with strong sales growth and made sequential earnings growth progress despite significant and increasing cost headwinds," said Jon Moeller, President and Chief Executive Officer.

Net earnings attributable to P&G for the quarter rose to $3.36 billion or $1.33 per share from $3.27 billion or $1.26 per share in the prior-year quarter.

On average, 19 analysts polled by Thomson Reuters expected the company to report earnings of $1.29 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter rose 7 percent to $19.38 billion from $18.11 billion in the same quarter last year. Analysts had a consensus revenue estimate of $18.73 billion for the quarter.

Excluding the net impacts of foreign exchange, acquisitions and divestitures, organic sales also increased 10 percent, driven by a three percent increase in shipment volumes, five percent from increased pricing, and a two percent increase from positive geographic and product mix.

Beauty segment sales increased two percent, Grooming segment sales grew three percent, Health Care segment sales increased 13 percent, Fabric and Home Care segment sales improved seven percent as well as Baby, Feminine and Family Care segment sales increased seven percent from last year.

Gross margin for the quarter decreased 400 basis points, hurt primarily by increased commodity costs, higher freight costs and negative product mix, partially offset by increased pricing and gross productivity savings and other impacts

"These results enable us to raise our top-line growth outlook for the fiscal year and to maintain our EPS guidance range," Taylor noted.

Looking ahead to fiscal 2022, the company confirmed its guidance for core earnings per share growth in the range of 3 to 6 percent from the base fiscal 2021 core earnings of $5.66 per share. This implies core earnings in a range of $5.83 to $6.0 per share.

The Company added that given increased cost and foreign exchange challenges, it now expects to be at the low end of the fiscal year core earnings per share growth range at three percent.

Meanwhile, the company now projects annual all-in sales growth of four to five percent and organic sales growth of six to seven percent. Previously, the company expected annual all-in sales growth of 3 to 4 percent and organic sales growth of 4 to 5 percent.

The Street expects the company to report earnings of $5.85 per share on revenue growth of 4.3 percent to $79.42 billion for the year.

Additionally, P&G said it expects to pay over $8 billion in dividends and repurchase $10 billion of common shares in fiscal 2022. Combined, P&G plans to return over $18 billion of cash to shareowners in the fiscal year.

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