Procter & Gamble Co (NYSE: PG) reported better than anticipated fiscal 2023 third-quarter earnings and revenues as higher prices aided in the mitigation of the decline in volumes. The company also upwardly revised its FY 2023 sales growth outlook while reaffirming its earnings per share outlook. The stock of P&G closed Friday’s trading session at $156.07, up $5.22 or 3.46% from the prior close.
The Cincinnati, Ohio-based company reported second-quarter revenues of $20.07 billion, up 3.60% from $19.38 billion in the similar quarter of fiscal 2022.
For the third quarter, which ended March 31, 2023, P&G posted a net income of $3.40 billion, or $1.37 per share, compared with $3.36 billion, or $1.33 per share, in the quarter that ended March 31, 2022.
Analysts surveyed by Refinitiv had anticipated the company to post earnings of $1.32 per share on revenues of $19.32 billion.
Commenting on the results, Jon Moeller, Chairman of the Board, President and CEO, said “We delivered strong results in the third quarter of the fiscal year 2023 in what continues to be a very difficult cost and operating environment.”
Segment wise:
- Beauty revenues rose by 3% y-o-y to $3.49 billion.
- Grooming revenues were $1.49 billion, up 1% from last year.
- Health Care revenues surged 6% y-o-y to $2.83 billion.
- Fabric & Home Care revenues were $7.02 billion, an increase of 5% from the previous year.
- Baby, Feminine & Family Care revenues grew by 3% y-o-y to $5.06 billion.
The company’s operating margin rose by 40bps in the latest quarter. Likewise, the gross margin grew by 150bps. For the fourth quarter in a row, P&G’s volume, devoid of price and currency changes, declined by 3% as consumers chose cheaper options. However, the average price of P&G’s product portfolio was 10% higher than during a similar period last year.
Segment-wise change in volumes (y-o-y basis)
- Beauty posted a 1% increase in volumes.
- Grooming, which owns brands such as Gillette and Venus, posted a 1% decrease in volume.
- Healthcare recorded a 1% rise in volumes.
- Fabric & Home Care, which owns brands such as Tide, Mr. Clean and Mr. Clean, recorded a 5% decline in volumes. The fall in volumes was primarily led by Europe.
- Baby, Feminine & Family Care, which owns brands such as Bounty, Pampers, and Charmin, reported a 4% drop in volumes. The decline was mainly led by Europe.
The company’s CFO, Andre Schulten, pointed out that volume increased compared with the second quarter. He further stated that quarterly volume declined only 2% on a y-o-y basis after excluding Russian operations.
Looking ahead, P&G expects FY 2023 earnings per share growth to be in line with a maximum of four percent compared with FY 2022 earnings of $5.81 per share. Furthermore, the company stated that it anticipates earnings per share to be on the lower end of the FY 2023 outlook.
P&G also lifted its FY 2023 organic sales growth to 6%, an increase from the previous range of 4% to 5%.
The quarterly earnings beat, decline in volumes, and upward revision of the sales growth view are expected to keep the stock of P&G range-bound with a slight bullish bias in the short term.
The historical price chart indicates that the stock of P&G is rising after consolidating at 150 levels. The next minor resistance is anticipated only near 160. Additionally, the stock is trading above its 50-day moving average while the MACD indicator is showing a positive reading. Therefore, we anticipate the stock of P&G to remain in an uptrend in the days ahead.
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