07.28.23
Net sales for P&G reached $82 billion in fiscal year 2023, an increase of 2% versus the year prior.
Organic sales, which exclude the impacts of foreign exchange and acquisitions and divestitures, increased 7%. The organic sales growth was due to a 9% increase from higher pricing and a 1% increase from favorable mix, partially offset by a 3% decrease in shipment volumes.
The company reported fiscal year 2023 fourth quarter net sales of $20.6 billion, an increase of 5% versus the prior year. Organic sales, which exclude the impacts of foreign exchange and acquisitions and divestitures, increased 8%. The organic sales growth was due to a 7% increase from higher pricing and a 2% increase from favorable mix, partially offset by a 1% decrease in shipment volumes.
Diluted net earnings per share were $1.37, an increase of 13% versus prior year. Operating cash flow was $5.3 billion and net earnings were $3.4 billion, with adjusted free cash flow productivity of 136%.
Sales by Segment in April to June Quarter
“The April-June quarter provided a very strong finish to fiscal year 2023 – top-line growth, bottom-line growth, and cash generation,” said Jon Moeller, chairman of the board, president and CEO. “The team met or exceeded our going-in plans for sales, earnings, and cash in a difficult operating environment and despite significant cost headwinds. As we look forward to fiscal 2024, we expect to deliver strong organic sales growth, EPS growth and free cash flow productivity – each in-line with our long-term growth algorithm, despite continued macroeconomic and geopolitical challenges. We remain committed to our strategy – a focus on daily use categories where performance drives brand choice, superiority (of product, package, communication, go-to-market execution and value), productivity, constructive disruption, and an agile and accountable organization structure and culture – all in pursuit of sustainable, balanced growth and value creation.”
Beauty segment organic sales in the April to June quarter increased 11% versus year ago. Hair care organic sales increased high single digits due primarily to increased pricing and positive product mix, partially offset by volume declines in Asia Pacific and Greater China. Skin and personal care organic sales increased low teens due to increased pricing, positive mix from the growth of the super-premium SK-II brand (versus a prior year period impacted by pandemic-related lockdowns) and volume growth from innovation.
Grooming segment organic sales increased 8% versus year ago primarily due to higher pricing, partially offset by volume declines from increased pricing and trade disruptions in Europe.
Health care segment organic sales increased 5% for the quarter. Oral care organic sales increased low-single digits due to increased net pricing, mostly offset by lower volumes due to market contraction in Europe and higher pricing in North America. Personal Health Care organic sales increased double digits due to positive mix from the disproportionate growth of respiratory products and higher pricing, partially offset by volume declines due to market contraction in Asia Pacific.
Home and fabric care segment organic sales increased 8% for the quarter. Fabric care organic sales increased mid-single digits driven primarily by higher net pricing and positive product mix, partially offset by lower volumes primarily in Greater China. Home Care organic sales increased double digits due to increased pricing and positive product mix, partially offset by market volume softness.
Baby, feminine and family care segment organic sales increased 9% versus year ago. Baby care organic sales increased high single digits due to increased pricing and positive product mix, partially offset by lower volumes from increased pricing. Feminine care organic sales increased double digits led by increased net pricing and positive product mix, partially offset by a volume decline. Family care organic sales increased double digits due to volume growth and increased pricing.
Selling, general and administrative expense (SG&A) as a percentage of sales increased 190 basis points versus the prior year, 140 basis points on a currency-neutral basis. The increase was driven by 470 basis points of marketing and overhead investments, largely offset by 190 basis points of leverage benefit due to increased sales and 140 basis points of overhead savings and marketing efficiencies.
Fiscal Year 2024 Guidance
P&G expects fiscal year 2024 all-in sales growth in the range of 3 -to 4% versus the prior year. Foreign exchange is expected to be a headwind of approximately one percentage point to all-in sales growth. The Company expects organic sales growth in the range of 4 to 5%.
P&G expects fiscal 2024 diluted net earnings per share growth in the range of 6 to 9% versus fiscal 2023 EPS of $5.90. This outlook equates to a range of $6.25 to $6.43 per share, with a mid-point estimate of $6.34, or an increase of 7.5%.
The company said its current outlook estimates a net benefit of around $400 million after-tax from favorable commodity costs net of unfavorable foreign exchange.
P&G said it expects a core effective tax rate to be approximately 20% in fiscal 2024.