Cost-Cutting Boosted P&G Earnings

By Paul Ausick Updated Jan 13, 5:01AM EST · Published Aug 2, 9:25AM EDT

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Cost-Cutting Boosted P&G Earnings — © courtesy of Procter & Gamble Co.

Procter & Gamble Co. (NYSE: PG) reported fourth-quarter and fiscal-year 2016 results before markets opened Tuesday. For the quarter, the consumer products maker posted adjusted diluted earnings per share (EPS) of $0.79 on revenues of $16.1 billion. In the same period a year ago, the company reported EPS of $0.93 on revenues of $16.55 billion. Fourth-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.74 and $15.83 billion in revenues.

For the full year, P&G posted adjusted diluted EPS of $3.67 on revenues of $65.3 billion, compared with 2015 EPS of $3.76 and revenues of $76.28 billion. Consensus estimates called for EPS of $3.64 on sales of $65.06 billion.

On a currency neutral basis, P&G’s quarterly adjusted EPS declined by 8% and rose by 7% for the full year.

P&G’s guidance for its 2017 fiscal year tabs organic sales growth of 2%, but just 1% when taking into account currency exchange estimates and “minor brand divestitures.” Core (adjusted) earnings are forecast to rise by mid-single digits compared with fiscal 2016 and GAAP earnings are forecast to rise by 45% to 55% including a $0.10 per share charge for restructuring costs and an undetermined benefit from the sale of 41 beauty brands to Coty.

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Consensus estimates call for first-quarter fiscal 2017 EPS of $1.00 on revenues of $16.51 billion. For the full year, the estimate for EPS is $3.96 and revenues are pegged at $65.95 billion.

CEO David Taylor said:

Looking forward, we’re committed to continued productivity improvement and cost savings that provide the fuel for innovation and investments needed to accelerate and sustain faster top-line growth. We expect fiscal 2017 to mark another significant step toward our goal of balanced growth and value creation and total shareholder return in the top third of our competitive peer group.

The company lowered its cost of goods sold by 5% year over year in the fourth quarter and by 11% compared with 2015. That was enough to report gross profits for the quarter flat with a year ago and down by 4% for the full year.

P&G’s shares traded up about 0.7% in Tuesday’s premarket session, at $87.04 in a 52-week range of $65.02 to $86.89. Thomson Reuters had a consensus 12-month price target of $86.47 before the report.

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About the Author Paul Ausick →

Paul Ausick has been writing for a673b.bigscoots-temp.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.