P&G Reports Net Sales of $20.6 Billion for Q1 2023

The Procter & Gamble Company reported first quarter fiscal year 2023 net sales of $20.6 billion, an increase of 1% versus the prior year. 

 

Organic sales increased 7%, excluding the impacts of foreign exchange, acquisitions and divestitures. This increase was driven by a 9% increase from higher pricing and a 1% increase from positive product mix, partially offset by a three percent decrease in shipment volumes. Unfavorable foreign exchange had a 6% impact on net sales.

 

Operating cash flow was $4.1 billion for the quarter. Adjusted free cash flow productivity was 86%. The company returned nearly $6.3 billion of cash to shareholders via approximately $2.3 billion of dividend payments and $4 billion of common stock repurchases.

 

“We delivered solid results in our first quarter of fiscal 2023 in a very difficult cost and operating environment,” said Jon Moeller, chairman, president and CEO. “These results enable us to maintain our guidance ranges for organic sales and EPS growth for the fiscal year despite continued significant headwinds. We remain committed to our integrated strategies of a focused product portfolio, superiority, productivity, constructive disruption and an agile and accountable organization structure. These strategies have enabled us to build and sustain strong momentum. They remain the right strategies to navigate through the near-term challenges we’re facing and continue to deliver balanced growth and value creation.”

Company executives expect unfavorable foreign exchange rates to cost $1.3 billion for the fiscal year. That's on top of a $2.6 billion cost increase for higher commodity, materials and freight costs. To compensate, P&G executives said they will return to pre-covid levels of cost cutting, a move that will impact marketing spending and overtime. The company has no plans to cut personnel, after adding thousands of employees to keep up with demand during covid.

 

Beauty segment organic sales increased 4% versus year ago. Skin and personal care organic sales increased mid-single digits due to innovation-driven volume growth and increased pricing, partially offset by negative mix from the decline of SK-II. Hair care organic sales increased mid-single digits driven by increased pricing, partially offset by volume declines related to market contraction.

 

Grooming segment organic sales increased 5% versus a year ago due to increased pricing, partially offset by negative mix due to market slowdown of appliances, the company reported.

 

Health care segment organic sales increased 8% versus a year ago. Oral care organic sales increased low single digits due to increased pricing and favorable premium product mix, partially offset by volume declines due to market contraction. Personal health care organic sales increased high-teens due to increased pricing, favorable mix and volume growth driven by a stronger cough, cold and flu season. All regions grew organic sales in personal health care.

 

Fabric and home care segment organic sales increased 8% versus a year ago. Fabric care organic sales increased high single digits due to increased pricing, partially offset by volume declines due to market contraction and market share softness, primarily in Europe. Home care organic sales increased high single digits due to increased pricing, partially offset by volume declines versus a high base period of increased consumption of cleaning products. All regions grew organic sales in home care.

 

Baby, feminine and family care segment organic sales increased 6% versus a year ago. Baby care organic sales increased mid-single digits due to increased pricing, partially offset by volume declines including portfolio reduction in Russia. Feminine care organic sales increased double digits driven by increased pricing and positive geographic mix, partially offset by volume declines due to portfolio reduction in Russia. Organic sales grew in all regions. Family care organic sales increased low single digits due to increased pricing, partially offset by lower market volumes and soft market share.

 

Diluted net earnings per share decreased by two percent to $1.57, driven by a decline in operating margin partially offset by higher net sales and a reduction in shares outstanding. Currency-neutral EPS were up seven percent versus the prior year EPS.

 

Selling, general and administrative expense (SG&A) as a percentage of sales decreased 90 basis points versus year ago, 140 basis points on a currency-neutral basis. The decrease was driven by 170 basis points of leverage benefit due to increased sales, 120 basis points of productivity savings from overhead and marketing expenses, partially offset by 100 basis points of overhead investments and 50 basis points of other impacts.

 

Operating margin for the quarter decreased 70 basis points versus the prior year and increased 10 basis points on a currency-neutral basis. Operating margin included gross productivity savings of 230 basis points.