Yahoo Finance Procter & Gamble Co (PG) (Q3 2024) Earnings Call Transcript Highlights: Strong Growth and ...
Organic Sales Growth: 3% increase, with volume in line with prior year.
Core Earnings Per Share (EPS): $1.52, up 11% versus prior year.
Core Gross Margin: Increased by 310 basis points.
Operating Margin: Increased by 90 basis points.
Adjusted Free Cash Flow Productivity: 87%.
Cash Returned to Shareowners: $3.3 billion this quarter, including $2.3 billion in dividends and $1 billion in share repurchases.
Dividend: Increased by 7%, marking the 68th consecutive annual increase.
Guidance for Organic Sales Growth: Maintained at 4% to 5% for the fiscal year.
Updated EPS Outlook: Raised to a range of 10% to 11% for fiscal '24.
Expected Cash Returns for the Year: More than $9 billion in dividends and $5 billion to $6 billion in share repurchases.
Release Date: April 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Could you provide a high-level expectation for global market growth over the next 12 months? A: Andre Schulten, CFO of Procter & Gamble, noted that despite multiple headwinds, global consumption trends remain stable. P&G is growing consumer offtake in terms of value share in 29 of its top 50 category country combinations. Specifically, U.S. consumption in quarter 3 was 5%, with P&G value share up, indicating strong consumption trends in North America and Europe.
Q: How are you addressing the market share trends in China, particularly excluding SK-II? A: Schulten highlighted that excluding SK-II, P&G is making sequential progress in China with share being flat and organic sales improving quarter-over-quarter. He mentioned specific strengths in Baby Care and appliance business growth in China, with ongoing investments in Hair Care.
Q: Can you discuss the impact of commodity benefits on your fiscal planning for '25 and your confidence in the productivity pipeline? A: Schulten explained that while commodity benefits have significantly impacted fiscal year-to-date results, any remaining changes are expected to be limited. He expressed strong confidence in P&G's productivity pipeline, emphasizing a well-structured 3-year productivity plan across all businesses.
Q: Could you elaborate on the flat price/mix in the U.S. in fiscal 3Q and the pricing-related volume declines in Baby Care? A: The CFO clarified that the flat price/mix contribution in the U.S. was anticipated and is a result of annualizing previous price increases. He noted no significant trade-down within P&Gs portfolio, with private-label shares remaining stable. Regarding Baby Care, Schulten mentioned regional differences in volume decline, with strong growth in China but opportunities for improvement in the U.S. mid-tier products.
Q: What is your level of visibility into returning to volume growth in Q4, and what is the expected ROI on increased marketing investments? A: Schulten expects volume growth to improve sequentially, driven by recovery in markets and easing of specific headwinds like U.S. inventory reductions. He affirmed that P&G's marketing investments are disciplined with strong ROI, driven by high-quality communication and innovative products.
Q: How do you reconcile the stronger earnings guidance with the expected significant step-up in reinvestment? A: Schulten indicated that the main drivers for the earnings outlook are the profiles of various tailwinds and headwinds rather than a major step-up in spend. He pointed out that while there will be some commodity and foreign exchange impacts in Q4, the overall guidance reflects a balanced view of these factors.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
