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Procter & Gamble Reports Mixed Bag Fourth-quarter Results

Net sales beat Wall Street expectations, but earnings came in below analysts' estimates.

Procter & Gamble’s fourth-quarter results were a mixed bag as the company warned of yet more headwinds on the horizon.

Net sales came in at $19.5 billion in the fourth quarter, up 3 percent, beating Wall Street estimates of $19.4 billion. But net income for the final three months of the fiscal year was $3.05 billion, or earnings per share of $1.21. While this marked an increase from $2.9 billion, or $1.13 per share, in 2021, it was below analysts’ estimates of $1.22 per share.

Jon Moeller, chairman of the board, president and chief executive officer at P&G, lauded 2022 as “another strong year” in the face of severe cost and operational headwinds, but cautioned that the company expects another year of significant headwinds.

“We’re very clear-eyed about the trials ahead. The list of challenges we face heading into our new fiscal year is longer than any I can recall,” he said during a call with financial analysts Friday, citing 40-year high inflation weighing on consumers in the U.S., operational costs and currency challenges.

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Nevertheless, he remains confident that the company has the tools necessary to navigate choppy waters. “I’ll repeat what I said on our April 2020 earnings call: the best response to uncertainties and challenges we face is to double down on the integrated set of strategies that are delivering very strong results. It won’t be easy. There will be bumps along the road, but we have the portfolio, superiority, productivity and, in my not-so-humble opinion, the best organization in the world. We have everything we need. So again, I think we are very well positioned.”

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On its China business, chief financial officer Andre Schulten told analysts that P&G had been significantly impacted by the COVID-19 lockdowns, although it is finally starting to see some improvement in the numbers.

“The read for us across our category footprint and regional footprint in China is that the market contracted double digits over the quarter periods that we’re reading, and that is reflected in the results,” he explained. “More importantly, since consumer mobility started to resume, the COVID-19 lockdowns are easing, we’re seeing a return to growth in our categories. Our shares are responding favorably. So we’re hopeful that we return to midsingle-digit growth in China over the next few quarters. Certainly, the team on the ground is excited, capable and has everything ready to go, but we need to see that consumer mobility come back.”

In beauty, organic sales were unchanged versus year ago while hair care organic sales increased low-single digits due to increased pricing, partially offset by volume declines due to pandemic-related lockdowns in China and reduced operations in Russia. Skin and personal care organic sales decreased low-single digits driven by negative mix due to decline of the super-premium SK-II brand, which was impacted by pandemic-related lockdowns in China. That dip was partially offset by increased pricing and volume growth from innovation.

For the fiscal year 2023, the consumer products giant expects sales growth in the range of up 2 percent. P&G expects fiscal 2023 diluted net earnings per share growth in the range of flat to 4 percent.

P&G’s shares were down 5 percent to $140.60.