Procter & Gamble released its Q1 2025 earnings report, revealing a slight decline in sales due to a weakened Chinese economy and conflict in the Middle East. Despite these challenges, the results were largely in line with Wall Street's expectations, and the company maintained its full-year guidance. There was little reaction after the data, the stock price is up 0.4% to $172. Implied volatility after earnings based on historical data was 1.22% with average surprise of 3.56%.
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- Net sales fell by 1% compared to the same period last year
- Earnings per share (EPS) of $1.93, beating estimates by $0.03
- Revenue of $21.9 billion, slightly below the expected $22.02 billion
- Profits of $4.0 billion, a 12% decline from the year-earlier period
- Maintained fiscal 2025 guidance for sales and earnings growth
Analyst estimates Source: Bloomberg
Key Metrics
- Net sales: -1% year-over-year
- Sales volume: Flat (declines in beauty and healthcare offset by growth in grooming, fabric, and home care)
- Organic sales of skin-care products: -20% (primarily due to SK-II brand in China)
- EPS: $1.93 (beat estimates of $1.90)
- Revenue: $21.9 billion (missed estimates of $22.02 billion)
Segment Performance
- Beauty and healthcare: Declined in sales volume
- Grooming, fabric, and home care: Showed growth in sales volume
- SK-II brand: Significant decline due to weaker economic conditions in China and anti-Japan sentiment
Outlook
- Maintained fiscal 2025 guidance:
- All-in sales growth: 2% to 4%
- Organic sales growth: 3% to 5%
- Diluted net earnings per share growth: 10% to 12%
- Core earnings per share growth: 5% to 7% (equating to $6.91 to $7.05 per share)
- Expected commodity cost headwind of approximately $200 million after tax ($0.08 per share)
- Foreign exchange impact expected to be neutral
- Core effective tax rate: 20% to 21%
- Capital spending: 4% to 5% of fiscal 2025 net sales
- Adjusted free cash flow productivity: 90%
- Planned dividend payments: around $10 billion
- Planned share repurchases: $6 to $7 billion
Additional Notes
- P&G has no plans to cut prices in the U.S. market
- The company sees consumers trading up to P&G brands despite economic pressures
- Global food makers like PepsiCo and Nestlé have warned of weaker consumer demand
- P&G's stock price closed at $172.28, up 2.57% in the last 3 months and 16.21% in the last 12 months
- The company received 3 positive and 13 negative EPS revisions in the last 90 days
There was little reaction after the data, the stock price is up 0.4% to $172. Implied volatility after earnings based on historical data was 1.22% with average surprise of 3.56%.
Implied volatility Source: Bloomberg
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