Is Procter & Gamble’s Stock Dip a Sign of Trouble Ahead?
Procter & Gamble (P&G), a leading consumer goods giant, recently announced its fourth-quarter results for fiscal 2024, revealing a mixed performance. Despite surpassing earnings expectations, the company’s revenue fell short, causing a dip in its stock price.
P&G reported an earnings per share (EPS) of $1.40 for the fourth quarter, exceeding the analysts’ projection of $1.37. However, the company’s revenue of $20.53 billion did not meet the expected $20.74 billion. This revenue miss led to a 2.6% drop in P&G’s shares during premarket trading.
Net sales for the quarter remained flat compared to the previous year, while organic sales, excluding the impacts of foreign exchange, acquisitions, and divestitures, increased by 2%. This growth was driven by a 1% rise in both all-in volume and pricing, offset by a 2% negative impact from foreign exchange.
For fiscal year 2024, P&G reported a 2% increase in net sales, reaching $84.0 billion. The company’s organic sales saw a 4% rise, primarily due to higher pricing. P&G’s diluted net earnings per share were $6.02, a 2% increase from the prior year, despite higher restructuring charges and a non-cash charge related to the Gillette trade name intangible asset. Core net earnings per share increased by 12% to $6.59, with a 16% increase in currency-neutral core EPS.
P&G’s various product segments showed mixed results. The grooming, health care, and fabric and home care segments reported 2% volume growth for the quarter. The grooming segment saw a notable 7% increase in organic sales, driven by higher pricing and innovation in Latin America.
Fabric and home care also experienced growth, particularly in North America and Europe, due to increased promotional spending and favorable product mix.
Conversely, the beauty and baby, feminine, and family care divisions struggled, with both segments seeing a 1% decline in volume.
The beauty segment’s organic sales grew by 3%, but sales of the high-end SK-II brand and other products in Greater China declined. Baby and feminine care faced lower demand for diapers, contributing to the overall decrease.
Looking ahead, P&G provided guidance for fiscal 2025, anticipating all-in sales growth between 2% and 4% and organic sales growth between 3% and 5%.
The company expects a core net earnings per share range of $6.91 to $7.05, representing a mid-point estimate of $6.98, which is slightly above the analysts’ consensus of $6.96.
However, P&G also warned of a net headwind of approximately $500 million after-tax from unfavorable commodity costs and foreign exchange, equating to a $0.20 per share impact on core EPS growth. Additional headwinds of $0.10 to $0.12 per share are anticipated from the non-repetition of benefits seen in the previous fiscal year.
Despite the challenges, P&G continues to focus on delivering value to its shareholders. In fiscal 2024, the company returned over $14 billion to shareholders through $9.3 billion in dividend payments and $5 billion in share repurchases.
With the dividend increase in April 2024, P&G marked its 68th consecutive year of dividend increases and the 134th consecutive year of dividend payments.