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Procter & Gamble finally has some good news for investors – The Motley Fool



It has taken some time, but Procter & Gamble (NYSE: PG) shareholders are finally seeing better results from the consumer titanium. The owner of basic food concessions such as Gillette razors and Pampers diapers announced faster sales growth this week than in the last two years. P & G has paired these positive sales reports with improved profitability as well. The results kept the company on course to achieve its aggressive operational and financial targets for the 2019 fiscal year.

More about these goals for the fiscal year. First, here's how the first quarter's results compared to the same period last year:

Metric

Q1

2019

Q1 2018

Growth (YOY)

Revenue [19659009] $ 16.7 billion

$ 16.7 billion

N / A

Net Income

$ 3.2 billion

$ 2.9 billion

12%

Earnings per share

$ 1.22

$ 1.06 [19659010] 12%

Source: P & G Financial Filings

Find traction

The pace of expansion P & G accelerated significantly thanks to strong sales volumes and stable pricing. Some categories with long-lasting difficulties, including shaving, enjoyed healthy rebounds, indicating that management's strategic initiatives could finally take hold.

  A woman who buys laundry detergent.

Image Source: Getty Images The Quarter:

  • Net sales were held flat due to exchange rate movements. On an organic basis, however, sales increased 4%, a sharp acceleration from the 1% increase in P & G over the last two quarters.
  • P & G started the quarter with the price increase in key parts of the portfolio and prices improved compared to the previous quarter. However, most of the growth came from higher volumes, especially in shaving and the laundry segment. The company attributed its e-commerce profits and previous price reductions to the Gillette brand. Laundry products continue to sell well thanks to innovation and effective marketing support.
  • The gross profit margin declined as savings were compensated by cost reductions through rising input prices. However, P & G increased its operating profit margin due to constant pricing and declining costs.
  • Adjusted free cash flow was $ 2.7 billion, of which more than 90% was converted directly into profits.
  • P & G Spends $ 1.3 Billion on Share Repurchases and Dividend Payments of $ 1.9 Billion

What Management Had to Say

CEO David Taylor celebrated the rapid pace of growth and growth At the same time, it found that it was driven by rising demand. "We achieved strong consumption, organic volume and organic sales in the first quarter," he said in a press release. Executives said they were improving industry trends in some segments, but said most of the recovery could be linked to their supply chain, innovation and marketing initiatives. "Our focus on superiority, productivity and improving the organization and culture of P & G is driving improved results," said Taylor.

Outlook

P & G confirmed all important parts of its outlook for the fiscal year. The company expects a decline in sales of up to 2%, but only due to exchange rate fluctuations. According to management, organic sales should still increase between 2% and 3%, compared to only 1% last year and 2% in the 2017 financial year. Grow faster, between 3% and 8% a mix of rising prices and efficiency savings. These benefits are partly offset by higher raw material costs for raw materials such as plastic, oil and paper.

Overall, the report gives investors good reason to be optimistic about P & G's business. Yes, its recovery has stalled several times over the last two years. Nevertheless, the underlying demand seems to be stronger today than in the past. This positive trend could help P & G achieve significant volume growth in the coming quarters, supporting higher prices and profitability.

                                                
                                            
                                        
                                    


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