Procter & Gamble on Track to Deliver on Fiscal Year Guidance

Image Source: Procter & Gamble

By Brian Nelson, CFA

Procter & Gamble (PG) reported better than expected second quarter results for fiscal 2025 on January 22, with revenue and non-GAAP earnings per share coming in ahead of the consensus forecasts. Net sales increased 2% in the quarter, while organic sales, which excludes M&A and foreign exchange impacts, advanced 3%. Organic sales growth was led by its “Baby, Feminine, and Family Care” unit, where organic sales increased 4%. Organic sales growth in its “Beauty” and “Grooming” segments was 2%, while organic sales in its “Health Care” and “Fabric & Home Care” divisions increased 3%. Core earnings per share were $1.88, an increase of 2% compared to the year-ago period.

Management had the following to say about the quarter:

The P&G team delivered an acceleration in organic sales growth, core EPS growth and strong cash return to shareowners in the second quarter. Our first-half results keep us on track to deliver within our guidance ranges on all key financial metrics for the fiscal year. We remain committed to our integrated growth strategy of a focused product portfolio of daily use categories where performance drives brand choice, superiority — across product performance, packaging, brand communication, retail execution and consumer and customer value — productivity, constructive disruption and an agile and accountable organization. This strategy has enabled our solid results and is a foundation for balanced growth and value creation.

For the six months ended December 31, cash flow from operations came in at $9.13 billion, while capital spending was $1.92 billion, resulting in free cash flow generation of $7.21 billion, which handily covered cash dividends paid to shareholders of $4.9 billion over the same time period. At the end of the calendar year, P&G had $10.2 billion in cash and cash equivalents and $34.7 billion in short- and long-term debt.

Looking to fiscal 2025 guidance, all-in sales growth is expected in the range of 2%-4% versus the prior year. Organic growth for the fiscal year is targeted in the range of 3%-5%. P&G reiterated its core earnings per share growth for the fiscal year to be in the range of 5%-7%, equating to a range of $6.91-$7.05, or a 6% increase at the midpoint. In fiscal 2025, P&G expects to pay around $10 billion in dividends and repurchase $6-$7 billion of common shares. At the time of this writing, shares of P&G yield ~2.5%.

—–