Operating cash flow was
'The strong results we delivered this quarter are a direct reflection of the integral role our products play in meeting the daily health, hygiene and cleaning needs of consumers around the world,' said
January - March Quarter Discussion
Net sales in the third quarter of fiscal year 2020 were
January -
https://news.pg.com/press-release/pg-corporate-announcements/pg-announces-fiscal-year-2020-third-quarter-results
Net sales percentage changes are approximations based on quantitative formulas that are consistently applied.
(2)
Other includes the sales mix impact from acquisitions and divestitures and rounding impacts necessary to reconcile volume to net sales.
Beauty segment organic sales increased one percent versus year ago. Skin and Personal Care organic sales increased low single digits driven by innovation, increased pricing and increased marketing spending, partially offset by negative product mix, due to the double digits decline of the super-premium SK-II brand caused by the temporary disruption of retail markets across
Grooming segment organic sales decreased one percent versus year ago. Shave Care organic sales decreased low single digits driven by negative mix due to the disproportionate decline in
Health Care segment organic sales increased nine percent.
Fabric and Home Care segment organic sales increased 10% for the quarter. Fabric Care organic sales increased high single digits driven by innovation, market growth, increased consumer demand in
Baby, Feminine and Family Care segment organic sales increased seven percent versus year ago.
Diluted net earnings per share were
Reported gross margin increased 60 basis points, including a 60 basis-point hurt from higher non-core restructuring charges versus the prior year. Core gross margin increased 120 basis points versus the prior year, including 10 basis points of negative foreign exchange impacts. On a currency-neutral basis, core gross margin increased 130 basis points driven by 170 basis points of gross productivity savings, 100 basis points from commodity cost decreases and 40 basis points of pricing benefit, partially offset by 180 basis points of unfavorable product mix and other impacts.
Selling, general and administrative expense (SG&A) as a percentage of sales increased 10 basis points on a reported basis versus the prior year, including a 10 basis-point help from a year-on-year reduction in non-core restructuring charges. Core SG&A as a percentage of sales increased 20 basis points versus the prior year, including approximately 70 basis points of negative foreign exchange impacts. On a currency-neutral basis, core SG&A as a percentage of sales decreased 50 basis points as 180 basis points of sales leverage benefit and 70 basis points of savings from overhead and marketing expenses were partially offset by 190 basis points of increased marketing investments and 10 basis points of inflation and other impacts.
Operating profit margin increased 50 basis points versus the base period on a reported basis, including 50 basis points hurt from higher non-core restructuring charges. Core operating margin increased 100 basis points including approximately 80 basis points of negative foreign exchange impacts. On a currency-neutral basis, core operating margin increased 180 basis points including total productivity cost savings of 240 basis points.
Fiscal Year 2020 Guidance
The Company adjusted its outlook for fiscal 2020 all-in sales growth, from a range of four to five percent growth to a range of three to four percent growth versus the prior year, to reflect stronger headwinds from foreign exchange. The revised growth estimate includes a negative two percentage point impact from foreign exchange, partially offset by a modest positive impact from acquisitions and divestitures. The Company maintained its guidance for organic sales growth in the range of four to five percent.
The Company maintained its guidance range for fiscal 2020 all-in GAAP diluted net earnings per share growth at 235% to 245%, noting that the comparison period is significantly depressed by the Gillette Shave Care impairment charges in fiscal 2019. P&G also maintained its fiscal 2020 guidance for core earnings per share growth at the range of eight to eleven percent growth versus fiscal 2019.
The Company is not able to reconcile its forward-looking non-GAAP cash flow measure without unreasonable efforts because the Company cannot predict the timing and amounts of discrete cash items, such as acquisitions, divestitures, or impairments, which could significantly impact GAAP results. The Company maintained its estimate for fiscal 2020 adjusted free cash flow productivity at 100%.
The Company expects to pay over
Forward-Looking Statements
Certain statements in this release or presentation, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are 'forward-looking statements' within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words 'believe,' 'project,' 'expect,' 'anticipate,' 'estimate,' 'intend,' 'strategy,' 'future,' 'opportunity,' 'plan,' 'may,' 'should,' 'will,' 'would,' 'will be,' 'will continue,' 'will likely result,' and similar expressions. Forward-looking statements are based on current expectations and assumptions, which are subject to risks and uncertainties that may cause results to differ materially from those expressed or implied in the forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or otherwise, except to the extent required by law.
Risks and uncertainties to which our forward-looking statements are subject include, without limitation: (1) the ability to successfully manage global financial risks, including foreign currency fluctuations, currency exchange or pricing controls and localized volatility; (2) the ability to successfully manage local, regional or global economic volatility, including reduced market growth rates, and to generate sufficient income and cash flow to allow the Company to effect the expected share repurchases and dividend payments; (3) the ability to manage disruptions in credit markets or changes to our credit rating; (4) the ability to maintain key manufacturing and supply arrangements (including execution of supply chain optimizations and sole supplier and sole manufacturing plant arrangements) and to manage disruption of business due to factors outside of our control, such as natural disasters, acts of war or terrorism, or disease outbreaks; (5) the ability to successfully manage cost fluctuations and pressures, including prices of commodities and raw materials, and costs of labor, transportation, energy, pension and healthcare; (6) the ability to stay on the leading edge of innovation, obtain necessary intellectual property protections and successfully respond to changing consumer habits and technological advances attained by, and patents granted to, competitors; (7) the ability to compete with our local and global competitors in new and existing sales channels, including by successfully responding to competitive factors such as prices, promotional incentives and trade terms for products; (8) the ability to manage and maintain key customer relationships; (9) the ability to protect our reputation and brand equity by successfully managing real or perceived issues, including concerns about safety, quality, ingredients, efficacy or similar matters that may arise; (10) the ability to successfully manage the financial, legal, reputational and operational risk associated with third-party relationships, such as our suppliers, contract manufacturers, distributors, contractors and external business partners; (11) the ability to rely on and maintain key company and third party information technology systems, networks and services, and maintain the security and functionality of such systems, networks and services and the data contained therein; (12) the ability to successfully manage uncertainties related to changing political conditions (including the
About
P&G serves consumers around the world with one of the strongest portfolios of trusted, quality, leadership brands, including Always, Ambi Pur, Ariel, Bounty, Charmin, Crest, Dawn, Downy, Fairy, Febreze, Gain, Gillette, Head & Shoulders, Lenor, Olay, Oral-B, Pampers, Pantene, SK-II, Tide, Vicks, and Whisper. The P&G community includes operations in approximately 70 countries worldwide. Please visit http://www.pg.com for the latest news and information about P&G and its brands.
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