ii view: Procter & Gamble shaves forecasts

Third-quarter results to 31 March

• Net sales down 2% to $19.8 billion
• Core earnings per share (EPS) up 1% to $1.54
• Quarterly dividend up 5% to $1.0568 per share

Chief executive Jon Moeller said:

“We remain committed to our integrated growth strategy of a focused product portfolio of daily use categories. We’re maintaining investments in superior innovation across price tiers to improve value for consumers and drive category growth.”

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ii round-up:

Branded goods maker Procter & Gamble Co (NYSE:PG) today cut sales and earnings forecasts given both a challenging consumer and geopolitical environment. 

The owner of brands including Gillette, Fairy and Oral-B now expects flat full-year sales to 30 June, down from a previous estimate of up to 4% growth. Forecast earnings per share of up to $6.82 would be down from a previous $6.91-7.02. 

Shares in the Dow Jones company fell 5% in US trading having come into these latest results down around 1% so far in 2025. That’s below a 4% gain for European rival Unilever (LSE:ULVR) but better than a near 7% fall for the Dow index itself during 2025.

Net sales in the third quarter to 31 March fell 2% to $19.8 billion, below Wall Street hopes for $20.11 billion. A 1% gain in core earnings per share from a year ago to $1.54 beat analyst estimates of $1.52 per share. 

Productivity savings and product price increases during the period more than offset higher raw material prices and the cost of ongoing investments. 

Organic sales growth of 4% for P&G’s health care products division led the way during the quarter, with sales at the Baby, Feminine & Family Care business the worst with a retreat of 1%.  

A previously announced Q3 dividend payment of $1.0568 per share is up 5% from the previous quarter, with P&G continuing to forecast total share buybacks for the current financial year of up to $7 billion.  

Broker Morgan Stanley reiterated its ‘overweight’ stance on the shares following the results, flagging a fair value share price of $191 per share. 

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 accounted for 48% of sales with overseas destinations the balance.  

For investors, retaliatory trade tariffs imposed by China following the USA’s implementation could now hindering demand. Potential inflation caused by trade tariffs could result in consumers more broadly switching to cheaper supermarket brands. Sizeable overseas sales mean currency moves are a major consideration, while the impact of product chemicals and packaging on the environment should not be overlooked.

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On the upside, 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. Wide geographical diversity should help positives for one region counter challenges for another, while more than 65 years of dividend increases leave the shares on a forecast dividend yield of around 2.4%.

For now, and while outlook uncertainties have increased, this well-managed consumer goods titan looks to remain worthy of its place in diversified long-term focused investment 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