Baby Care and Family Care net sales up at P&G

06 Aug '12

5 min read

The Procter & Gamble Company increased organic sales for the April-June quarter by three percent driven by price increases, partially offset by geographic mix. Net sales were $20.2 billion, a decrease of one percent versus the prior year period. Foreign exchange reduced net sales by four percent. The Company continued to deliver broad-based organic sales growth, with four of five business segments increasing versus the prior year.

Diluted net earnings per share from continuing operations were $0.74, including non-core charges of $0.08 per share. Core net earnings per share were $0.82, consistent with the prior year period and $0.03 per share above the top-end of the Company's guidance range. Additionally, P&G completed the sale of the Snacks business in the quarter, resulting in a net gain of $0.48 per share.

“We enter fiscal 2013 with very strong developing market momentum, strengthened plans on our core developed market business, and with the benefit of a $10 billion cost savings program, which is well underway,” said Chairman, President and Chief Executive Officer, Bob McDonald. “Despite a difficult macro environment, we see significant opportunities for top- and bottom-line growth.”

Net sales decreased one percent to $20.2 billion in the April – June quarter. Organic sales grew three percent. Volume was in line with the year ago period. Broad-based price increases across all segments and regions increased net sales by four percent. This represented the fourth consecutive quarter in which positive pricing contributed four percent or more to net sales growth. Unfavorable foreign exchange reduced net sales growth by four percent. Geographic mix reduced net sales by one percent.

Diluted net earnings per share from continuing operations were $0.74 per share, a decrease of 10 percent due to non-core incremental restructuring charges of $0.08 per share. Gross margin contracted 40 basis points due mainly to higher commodity costs, unfavorable geographic and product mix and restructuring charges, which were partially offset by positive pricing and cost savings. Selling, general and administrative expenses (SG&A) as a percentage of net sales decreased 10 basis points.

Core net earnings per share were $0.82, in line with the prior year period. Excluding non-core charges, core gross margin increased 10 basis points and SG&A as a percentage of net sales decreased 80 basis points. Core operating profit, which excludes non-core items, increased four percent.

Operating cash flow was $4.0 billion for the fourth quarter and free cash flow was $2.7 billion. The Company returned $1.6 billion of cash to shareholders as dividends. In April 2012, P&G increased its dividend for the 56th consecutive year, making P&G one of only six U.S. companies with this track record of dividend increases. P&G has paid a dividend for 122 consecutive years.

Net sales increased three percent to $83.7 billion for fiscal 2012 on unit volume that was in line with the prior year period. Organic sales grew three percent. Price increases across all segments improved net sales by four percent, partially offset by unfavorable geographic and product mix which reduced net sales by one percent.

Fabric Care and Home Care net sales decreased one percent to $6.6 billion. Unit volume decreased one percent. Organic sales were up three percent. Pricing increased net sales by five percent. Mix reduced net sales by one percent due to unfavorable geographic mix. Foreign exchange reduced net sales by four percent. Fabric Care volume decreased low single digits as growth in developing regions, driven by product innovation and market growth, was more than offset by a decrease in developed regions due to consumer value issues following price increases taken in previous periods. Home Care volume increased low single digits driven by a double digit increase in developing markets behind innovation and distribution expansion and a low single digit increase in developed markets due to Air Care innovation. Pet Care volume decreased high single digits. Batteries volume decreased low single digits due to distribution losses in developed regions, partially offset by growth in developing regions from promotional and initiative activity. Net earnings increased 10 percent to $635 million, due to operating margin expansion partially offset by the decrease in net sales.