The Procter & Gamble Company (NYSE: PG) reported its strongest quarter of organic sales growth in over a decade for the fourth quarter of 2019. The company reports on a fiscal year basis.
The company beat analysts’ expectations on both earnings per share (EPS) and net sales in the fourth quarter of fiscal year 2019. P&G reported net sales of $17.1 billion, up 4 percent year-over-year and ahead of analysts’ $16.86 billion estimate.
The company’s core EPS climbed 17 percent year-over-year, coming in at $1.10. Analysts expected the household products manufacturer to post a core EPS of $1.05. P&G attributed its strong core EPS to organic sales growth and core operating margin expansion.
P&G has beat earnings estimates every quarter for over a year now.
“We met or exceeded each of our going-in core targets for sales, profit and cash in fiscal 2019,” said David Taylor, chairman, president and CEO of P&G. “We built sales, market share and profit margin momentum throughout the year, ending with our strongest quarter of organic sales growth in well over a decade.”
Net sales saw 4 percent growth year-over-year in the fourth quarter, while organic sales rose 7 percent. THe company attributed the spike in organic sales to an increase in organic shipment volume and increased pricing.
Beauty segment organic sales increased 8 percent year-over-year, driven by skin and personal care products. The company attributed the segment’s success to market growth, innovation, positive product mix and increased pricing.
Grooming segment organic sales came in the weakest of all the company’s major segments but still posted 4 percent year-over-year growth. Shaving care products and appliances drove this segment’s growth.
The healthcare and fabric and home care segments showed the strongest fourth quarter growth, coming in at 10 percent each. The company attributed the healthcare increase to innovation, a late season increase in cough and cold incidents and a favorable mix. Growth in the fabric and home care segment was attributed to innovation and devaluation-related price increases.
The company’s baby, feminine and family care segment saw a 5 percent increase in organic sales year-over-year. Feminine care sales increased high-single digits, while family care sales rose mid-single digits. Baby care organic sales reversed a slight decrease from last quarter and rose low-single digits.
P&G’s core gross margin increased 120 basis points, including 40 basis points of negative foreign exchange impacts. On a currency-neutral basis, core gross margin increased 160 basis points.
The company’s core operating margin came in at 19.6 percent for the fourth quarter.
Fiscal year 2019 results
The company’s fiscal year 2019 net sales were $67.7 billion, an increase of 1 percent from the prior year. Organic sales increased 5 percent due to an increase in organic volume.
Core EPS came in at $4.52, an increase of 7 percent driven by the increase in net sales and lower effective tax rates.
Fiscal year 2020 guidance
The company said it expects fiscal year 2020 all-in sales growth in the range of 3 to 4 percent versus the prior fiscal year.
Core earnings per share are expected to increase 4 to 9 percent versus fiscal 2019 Core EPS of $4.52. P&G said its current outlook for commodities, foreign exchange, transportation and tariffs is expected to provide a modest net benefit to earnings growth in fiscal year 2020
“Looking ahead, we will continue to focus on superiority, productivity, constructive disruption and improving P&G’s organization and culture to deliver sustainable, balanced top-line and bottom-line growth along with strong cash generation in a challenging competitive and macroeconomic environment,” Taylor said.
P&G stock was up 2.93 percent in pre-market trading on Tuesday, July 30.