On October 19th, 2021 Procter & Gamble reported 1st quarter results for fiscal year 2022 (see press release here).
The company reported net sales of $20.3 billion, representing 5% top line revenue growth versus Q1 2021. Looking at sequential quarters, top line growth slowed from the 7% pace posted in Q4 2021.
Diluted GAAP earnings per share (EPS) in Q1 was $1.61, down 1% vs. 2021 but above consensus estimates by $0.02. Reported (non-GAAP) ‘core’ earnings were $1.63.
Overall ‘organic’ revenue gained 4% versus Q1 last year. The company posted positive organic revenue gains in all segments and volume gains in all but Beauty where volume was flat vs. 2021.
For the second quarter in a row, P&G’s Health Care segment led with organic revenues up 7% (up 14% in Q4), mostly driven by a 3% volume gain and 3% mix gains. Pricing increased modestly across all segments except Baby, Feminine & Family Care, which experienced a -1% price decline.
Like Q4, net pricing increased 1% in Q1. P&G plans to raise more prices beginning in Q2 ( see more here). The company reported that gross margins declined 0.37%, primarily due to higher commodity and cost inputs.
P&G maintained its fiscal 2022 ‘all-in’ sales growth forecast of 2% to 4% versus fiscal 2021. The company still expects 2022 bottom line ‘core’ EPS to grow between 3%-6% vs. 2021’s $5.66 per share.
The company’s forward estimates would put full year 2022 ‘core’ earnings per share in a range of $5.83 to $6.00. Applying their guidance to P&G’s September 30th, 2021 closing price ($139.80) places their forward price/earnings valuations between 23.3 and 23.9 times earnings.
As in Q4, PG’s Q1 2022 beat consensus forecasts. Forward guidance was maintained, and valuations continue to trend near the high-end of its range over the past decade (14.6x in 2011 and 25.7x in 2019).
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