ii view: Procter & Gamble in good health after forecast beat
Selling a wide array of well-known consumer brands and boasting a highly enviable dividend track record. We assess prospects.
22nd January 2025 15:26
by Keith Bowman from interactive investor
Second-quarter results to 31 December
- Net sales up 2% to $21.9 billion
- Core Earnings Per Share (EPS) up 2% to $1.88
- Quarterly dividend of $1.0065 per share, unchanged from the previous quarter
Chief executive Jon Moeller said:
“We remain committed to our integrated growth strategy of a focused product portfolio of daily use categories. This strategy has enabled our solid results and is a foundation for balanced growth and value creation.”
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ii round-up:
Consumer goods colossus Procter & Gamble Co (NYSE:PG) today detailed sales and earnings that beat Wall Street expectations amid improving customer demand.
An overall 1% increase in product volumes helped push net sales up 2% year-over-year to $21.9 billion, fuelling a 2% improvement in core earnings to $1.88 per share. Wall Street analysts had expected sales of $21.5 billion and earnings of $1.86 per share.
Shares in the Dow Jones company rose 3% in US trading having come into these latest results up by around a tenth over the last year. That’s behind a one-quarter gain for European rival Unilever (LSE:ULVR). The Dow Jones itself is up 16% over that time.
The maker of brands including Ariel, Gillette and Oral-B maintained its full year 2025 forecasts, with sales expected to rise between 2% to 4% year-over-year and core earnings to improve by 5% to 7%.
Product volumes for the Baby, Feminine and Family Care segment improved the most, gaining 4% from Q2 2024 and aiding a 4% increase in organic sales.
Weak China demand across Beauty products fuelled a 1% volume fall for the category, although with increased North American demand pushing a 2% rise in organic sales.
P&G previously declared a quarterly dividend of $1.0065 per share, unchanged from the prior quarter. Broker Morgan Stanley reiterated its ‘overweight’ stance on the shares following the results.
ii view:
Headquartered in Cincinnati and tracing its history back to 1837, P&G today employs more than 105,000 people across 70 countries. Other group brands include Tide, Febreze, Always, Pantene, Pampers, and Tampax. During the 2024 full year, Fabric & Home Care generated most revenues at around 35%. That was followed by Baby, Feminine and Family care at 24%, Beauty at 18%, Healthcare at 14% and Grooming the balance of 8%. Geographically, the USA accounts for 48% of sales with overseas destinations the balance.
For investors, economic challenges impacting China, accounting for around 7% of revenues, should not be ignored. Pressured consumer incomes more widely persist given high borrowing costs. Environmental considerations warrant consideration, while costs generally for businesses and including wages have increased.
More favourably, P&G’s long list of household goods feature regularly for shoppers around the world. Management initiatives to sharpen productivity and reduce costs are ongoing, while more than 65 years of dividend increases leave the shares on a forecast dividend yield of around 2.5%.
In all, and despite risks, this well managed consumer goods giant looks to remain deserving of its place in many already diversified portfolios.
Positives:
- Product and geographical diversity
- Progressive dividend policy
Negatives:
- Uncertain economic outlook
- Currency movements can hinder performance
The average rating of stock market analysts:
Buy
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