The Procter & Gamble Company (NYSE:PG) delivered 4 percent sales
growth to $22.1 billion for the October-December quarter. Growth was
driven by higher volume and pricing actions, partially offset by
geographic and product mix. The Company continued to deliver broad-based
organic sales growth, with all six business segments up versus the prior
year. Diluted net earnings per share were $0.57 per share, reflecting
non-core charges of $0.53 per share. The non-core items included a $0.50
per share non-cash impairment charge associated with the Appliances and
Salon Professional businesses. Core net earnings per share were $1.10,
toward the high end of the Company's expectations for the quarter.
"We continue to make progress against our key business priorities in a
difficult macroeconomic environment," said Chairman of the Board,
President and Chief Executive Officer Bob McDonald. "We delivered solid
top-line growth and continued to accelerate productivity improvements to
drive down costs. With the easing of commodity cost comparisons over the
next two quarters, continued solid top-line growth and cost savings
progress, we expect operating profit growth to accelerate in the second
half of the fiscal year."
Executive Summary
Net sales and organic sales increased four percent for the quarter.
Organic sales growth was broad-based, with all six business segments
growing for the second consecutive quarter.
Core net earnings per share decreased three percent to $1.10. The
benefits from solid sales growth and cost savings were more than
offset by higher commodity costs.
Diluted net earnings per share were $0.57 per share, down 49 percent
primarily due to non-core charges of $0.53 per share. The non-core
charges included a one-time $0.50 per share non-cash impairment charge
associated with the Appliances and Salon Professional businesses.
Operating cash flow was $3.3 billion for the quarter.
October-December Quarter Discussion
Net sales increased 4 percent to $22.1 billion in the October-December quarter. Organic sales also grew 4 percent. Volume increased
one percent behind overall market growth, initiatives and continued
market expansions. Volume grew at high single-digit rates in developing
regions. This growth was partially offset by a mid-single-digit decrease
in developed regions. Broad-based price increases across all segments
and geographies, designed to recover higher commodity costs and
devaluing developing market currencies, increased net sales by 4
percent. Geographic and product mix reduced net sales by 1percent.
Diluted net earnings per share were $0.57, a decrease of 49 percent
primarily due to non-core charges of $0.53 per share which include a
$0.50 per share non-cash impairment charge. Gross margin contracted 210
basis points due mainly to higher commodity costs, partially offset by
pricing and manufacturing cost savings. Selling, general and
administrative expenses (SG&A) as a percentage of net sales improved 150
basis points behind net sales leverage, a reduction in overhead spending
and lower charges for non-core items. Including the impact of non-core
items, operating margin declined 760 basis points.
Excluding the non-core items, core net earnings per share were $1.10,
and core operating margin declined 160 basis points.
Operating cash flow was $3.3 billion for the quarter and free cash flow
was $2.4 billion. The Company repurchased $0.5 billion of shares during
the quarter and returned $1.5 billion of cash to shareholders as
dividends.
