Procter & Gamble's ($PG) earnings demonstrated resilience in the fiscal fourth quarter, rising year over year even as revenue faced a decline. The company attributed this dynamic to a combination of pricing and volume enhancements that were unfortunately counterbalanced by the negative impact of foreign-currency fluctuations.
In its latest financial disclosures, adjusted earnings increased to $1.40 per share for the quarter ending in June, surpassing last year's earnings of $1.37 per share – a figure that aligned closely with the consensus analytics presented by Capital IQ. In contrast, sales declined slightly from $20.55 billion to $20.53 billion, falling short of market expectations which anticipated revenue of $20.74 billion. During Tuesday's trading session, Procter & Gamble's stock witnessed a decline of 6%, reflecting investor response to mixed performance indicators.
The company, renowned for its consumer staples like Crest toothpaste and Pampers diapers, reported a 1% increase in both pricing and volume; however, these gains were offset by a 2% setback due to foreign exchange headwinds. In breaking down the company's performance by segment, beauty sales experienced a 1% decrease year-over-year, landing at $3.72 billion, while its grooming and fabric and home care segments remained stagnant at $1.66 billion and $7.27 billion, respectively.
Conversely, healthcare sales took a positive turn, increasing by 3% to $2.67 billion, while the baby, feminine, and family care division saw a decline of 3%. Importantly, Gross margin saw an upward shift by 120 basis points, driven by higher pricing strategies, reduced commodity costs, and efficiency-driven productivity improvements.
Yet, selling, general and administrative expenses escalated to $6.3 billion, marking a rise from $5.78 billion in the comparable prior-year quarter. During the earnings call, Chief Executive Officer Jon Moeller emphasized, 'There's still more work to do to continue improving areas in our control, which will be needed to offset the headwinds that are largely not in our control.' Moeller reiterated the company’s commitment to enhancing productivity across all aspects of business management, notably from a profit and loss perspective and throughout the balance sheet. Looking ahead, Procter & Gamble projected an adjusted EPS range of $6.91 to $7.05 for fiscal 2025, indicating an expected annual growth of approximately 5% to 7%.
However, the firm conceded that a $500 million hit from commodity costs and foreign exchange would reduce the adjusted EPS by approximately $0.20 over the fiscal year. According to analyst expectations, normalized EPS is anticipated to be around $6.97. For the ongoing fiscal year, revenue is forecasted to rise by 2% to 4%, taking into account a foreign exchange headwind that could account for a one-percentage point impact.
Organic sales growth is predicted to range between 3% and 5%, contrasting with a recorded growth of 4% in fiscal 2024. Market analysts estimate revenue to hit around $86.91 billion, reflecting cautious optimism. In closing remarks, Chief Financial Officer Andre Schulten warned of the challenging environment facing the company, stating, 'We continue to expect the environment around us to remain volatile and challenging from input costs, currencies, to consumer competitors, retailers, and geopolitical dynamics.' Additionally, the firm has planned for a non-cash charge of approximately $750 million due to accumulated currency translation losses in the first quarter of the fiscal year ending June 30.
This comes on the heels of significant operational shifts, where Procter & Gamble has substantially liquidated its ventures in certain enterprise markets including Nigeria as of June 30, 2024, and completed the divestiture of its Argentinian operations at the very beginning of July..