Procter & Gamble Co(NYSE: PG) stock lost over 1.7% in the pre-market session on October 20th, 2017 (as of 8:16AM EDT; Source: Google finance) as the group delivered weak margins. GAAP earnings per share are forecasted to decrease 26% to 28% in FY18 against the fiscal year 2017.
For the first quarter of 2018, the group’s reported gross margin fell 40 basis points, while Core gross margin also fell 40 basis points, hurt by foreign exchange impacts. Operating profit margin lost 40 basis points against the base period on a reported, core and currency-neutral basis, despite overall productivity cost savings of 190 basis points for the quarter.
The group’s Net sales increased 1% yoy to $16.7 billion during the first quarter of 2018, against pcp with Organic sales boosted by better shipment volume.
But their Grooming segment organic sales fell 6% on a yoy basis hurt by sales impact in Shave Care, which offset growth in Appliances. Organic sales in Shave Care were hurt by price reductions in the U.S. and negative product mix. Even Baby, Feminine and Family Care segment organic sales lost 1% on a yoy basis with Baby Care organic sales falling mid-single digits on the back of rising competitive activity in Europe as well as fall in China Baby Care shipments on the back of wholesaler inventory run-down ahead of new innovation shipments.
On the other hand, the group’s Feminine Care organic sales improved on the back of product mix due to premium innovation. Family Care organic sales enhanced mid-single digits boosted by better distribution and marketing activities.
Fabric and Home Care segment organic sales rose 2% yoy boosted by gains in Fabric Care. Beauty segment organic sales rose 5% on a yoy basis driven by Skin & Personal Care growth in China, given the ongoing acceleration of the super-premium SK-II brand on the back of better strength of the brand campaign.
The group expects an organic sales growth in the range of 2% to 3% in fiscal 2018 and forecasts an core earnings per share growth in the range of five to seven percent against fiscal 2017 Core EPS of $3.92. The group expects over $100 million of incremental commodity cost headwinds leading to the hurricanes that hurt the Gulf Coast in September.
PG stock rose over 8.9% in this year to date (as of October 19th, 2017; Source: Google finance)