01.23.24
Procter & Gamble Company reported second quarter fiscal year 2024 net sales of $21.4 billion, an increase of 3% versus the prior year.
Organic sales, which excludes the impacts of foreign exchange and acquisitions and divestitures, increased 4%. Diluted net earnings per share were $1.40, a decrease of 12% versus prior-year primarily due to a non-cash impairment of the carrying value of the Gillette intangible asset. Core net earnings per share were $1.84, an increase of 16% versus prior year.
Operating cash flow was $5.1 billion, and net earnings were $3.5 billion for the quarter. Adjusted free cash flow productivity was 95%, which is calculated as operating cash flow excluding capital spending, as a percentage of net earnings excluding the Gillette impairment charge. The company returned $3.3 billion of cash to shareowners via approximately $2.3 billion of dividend payments and $1 billion of share repurchases.
“We delivered strong results in the second quarter, enabling us to raise our core EPS growth guidance and maintain our top-line outlook for the fiscal year,” said Jon Moeller, chairman of the board, president and CEO. “We remain committed to our integrated 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. The Happi Top 50 Company's team’s execution of this strategy has enabled us to build and sustain strong momentum. We have confidence this remains the right strategy to deliver balanced growth and value creation.”
Organic Sales By Segment
Beauty segment organic sales increased 1% versus year-ago. Skin and personal care organic sales declined mid-single digits as volume declines and unfavorable mix due to lower sales of SK-II were partially offset by higher pricing. Hair care organic sales increased high single digits driven by increased pricing, premium product mix and volume growth, primarily in North America.
Grooming segment organic sales increased 9% versus year-ago driven by higher pricing, premium product mix and volume growth.
Oral care organic sales increased mid-single digits due to increased pricing and premium product mix, partially offset by volume declines mainly in Latin America and Asia. Personal health care organic sales declined low single digits as volume declines and unfavorable mix due to market decline of respiratory products, were partially offset by increased pricing.
Fabric and home care segment organic sales increased 6% versus year ago. Fabric care organic sales increased mid-single digits due to increased pricing and mix due to growth of premium forms and fabric enhancers. Home care organic sales increased high single digits due to increased pricing, favorable premium products mix and volume growth from innovation.
Fiscal Year 2024 Guidance
P&G maintained its guidance range for fiscal 2024 all-in sales growth to be in the range of two to four percent versus the prior year. Foreign exchange is expected to be a headwind of approximately one to two percentage points to all-in sales growth. The company also maintained its outlook for organic sales growth in the range of four to five percent.
P&G adjusted its fiscal 2024 diluted net earnings per share growth from a range of six to nine percent to a range of -1% to in-line versus fiscal 2023 EPS of $5.90. This change is due to the impairment of the Gillette intangible asset value and the two-year restructuring program announced by the company last month. P&G raised its fiscal 2024 core net earnings per share growth from a range of six to nine percent to a range of eight to nine percent versus fiscal 2023 EPS. This outlook equates to a range of $6.37 to $6.43 per share.
P&G continues to expect unfavorable foreign exchange rates will be a headwind of approximately $1 billion after tax. The Company now expects the net impact of interest expense and interest income to be a headwind of approximately $100 million after tax. The Company continues to expect tailwinds of approximately $800 million after tax due to favorable commodity costs for fiscal year 2024.
P&G expects a core effective tax rate of approximately 21% in fiscal 2024.
Capital spending is estimated to be approximately 4% of fiscal 2024 net sales.
P&G continues to expect adjusted free cash flow productivity of 90% and expects to pay more than $9 billion in dividends and to repurchase $5 to $6 billion of common shares in fiscal 2024.