Procter & Gamble (P&G) has announced robust financial results for fiscal year 2024, underscoring the company's continued growth and resilience. The financial report reveals improvements across various metrics, with notable gains in net sales, earnings per share, and gross margins.
Financial performance highlights
P&G reported a two percent increase in net sales for the fiscal year, totaling $84 billion, up from $82 billion in the previous year. Additionally, the release reported "that organic sales, which excludes the impacts of foreign exchange and acquisitions and divestitures, increased four percent" and "that higher pricing contributed four points of growth to organic sales." This growth was driven by strategic pricing, productivity savings, and a favorable product mix.
In the company's press release, Chairman, President, and CEO Jon Moeller remarked, "Fiscal year 2024 was another year of strong results for P&G," highlighting that these results were achieved despite a challenging economic environment. Moeller attributed the success to P&G's robust portfolio of trusted brands and continued investments in innovation and efficiency.
Segment performance
As detailed in the company's press release, P&G's Hair Care and Beauty segment sales were strong performers: Beauty segment sales increased three percent versus the previous year, and Hair Care segment organic sales "increased high single digits driven by increased pricing and favorable product mix due to growth of premium products," the release said.
While "Skin and Personal Care organic sales were unchanged as growth from increased pricing was offset by lower sales of the super-premium SK-II brand and in Greater China," the release continued, "grooming segment organic sales increased seven percent versus year ago driven by increased pricing primarily in Latin America and volume growth from innovation."
Profit margins & expenses
The company's reported gross margin for the quarter improved by 120 basis points year-over-year, with a "core gross margin increase for the quarter of 140 basis points versus a year ago and a 180 basis points increase on a currency-neutral basis," the P&G release reported.
This improvement was "driven by 210 basis points of productivity savings, 100 basis points of lower commodity costs and 40 basis points of pricing benefit," which "were partially offset by 130 basis points of unfavorable product mix and 40 basis points of product/package reinvestments and other impacts," the release said.
Reported selling, general and administrative expense (SG&A) as a percentage of sales increased 260 basis points versus the prior year, the release continued. This rise was primarily due to significant investments in marketing and overhead, although it was somewhat offset by sales leverage and savings from marketing efficiencies, according to P&G's release.
Outlook for FY 2024
Looking forward, P&G has set optimistic targets for fiscal year 2024. The company expects all-in sales growth to be in the range of two to four percent, despite a projected headwind of approximately one percentage point due to foreign exchange impacts, according to the P&G press release. Additionally, organic sales growth is anticipated to be between three and five percent.
P&G also forecasts diluted net earnings per share (EPS) growth of 10-12%, which translates to an EPS range of $6.91 to $7.05 per share. The midpoint of this range, $6.98, represents a six percent increase over the previous fiscal year's EPS.
Additionally, P&G estimates "a net headwind of around $500 million after-tax from unfavorable commodity costs and unfavorable foreign exchange," the release confirmed.
Capital allocation & shareholder returns
P&G continues to prioritize returning value to shareholders. According to the company's press release, in fiscal year 2024, it plans to pay approximately $10 billion in dividends and repurchase between $6 and $7 billion of common shares.
Additionally, the company aims for adjusted free cash flow productivity of 90% and expects capital spending to be approximately four to five percent of net sales.
P&G's strong financial performance in fiscal year 2024 reflects its strategic focus on innovation, efficiency, and value creation. The company's robust growth across various segments and optimistic outlook for the coming year underscore its resilience and adaptability in a dynamic market environment.
As P&G continues to invest in its brands and operations, it remains well-positioned to deliver sustained growth and value to its shareholders.