Procter & Gamble Co. (P&G) experienced a mixed performance in the first quarter, as its shares faced downward pressure following the release of the company’s financial results. P&G reported total sales of $21.74 billion for the quarter, indicating a 1% year-over-year decrease, and fell short of the analyst consensus estimate of $21.91 billion. Although the total sales were below expectations, organic sales saw a modest growth of 2%, excluding the influences of foreign exchange, acquisitions, and divestitures. This organic growth was driven by a 1% increase in both pricing and volume.
Breaking down the performance by segment, P&G experienced a decline in the Beauty segment, with sales falling by 5%, and the Baby, Feminine & Family Care segment, which saw a 2% decrease. On the other hand, the Grooming segment's sales stayed relatively flat, while the Fabric & Home Care category saw slight growth of 1%, and Health Care sales increased by 2%. As a testament to its operational efficiencies, the gross profit remained at $11.3 billion. The gross margin saw a slight improvement, expanding by 10 basis points to 52.1%. Notable savings included a gain of 170 basis points from productivity improvements and 30 basis points from pricing adjustments, which were somewhat offset by increased costs: 90 basis points from commodity expenses, 60 basis points from an unfavorable mix, and 40 basis points from product reinvestments.
The operating margin saw expansion, increasing by 30 basis points to 26.7%. Consequently, the operating income for the quarter reported a 1% increase, reaching $5.80 billion. Evidence of P&G's financial resilience was visible in the adjusted earnings per share (EPS) of $1.93, which surpassed the analyst prediction of $1.90. As of September end, P&G's liquidity position was strong, with cash and equivalents totaling $12.16 billion. The company's operating cash flow was healthy at $4.3 billion for the quarter, and P&G returned approximately $4.4 billion to its shareholders through $2.4 billion in dividend payments and $1.9 billion in share repurchases.
Looking ahead, P&G reaffirmed its full-year guidance for fiscal year 2025, projecting an all-in sales growth range of 2% to 4% and an organic sales growth between 3% and 5%. This forecast translates into an anticipated revenue of between $85.72 billion and $87.40 billion for FY25, aligning closely with the initial estimate of $86.06 billion. Adjusted EPS is expected to range from $6.91 to $7.05, compared to the market consensus of $6.97. P&G also plans to continue its financial strategy, predicting 90% free cash flow productivity and promising approximately $10 billion in dividends, alongside $6 to $7 billion in share repurchases during fiscal 2025.
For investors seeking exposure to P&G, investment options include the iShares U.S. Consumer Staples ETF (IYK) and Fidelity MSCI Consumer Staples Index ETF (FSTA). At the last reported premarket check on Friday, shares of P&G had declined by 0.81% to $170.88. The company’s performance remains under close watch, as investors and analysts alike anticipate the earnings calls that could provide more insights and projections for the future.
