P&G Third Quarter Fiscal 2016 results: earnings per share of $0.97

P&G organic sales +1%, net ales -7%, diluted net earnings per share $0.97,+29%. Core EPS $0.86, -3%; Currency-Neutral Core EPS unchanged versus prior year.

procter gamble earnings per shareProcter & Gamble (NYSE:PG) reported third quarter fiscal year 2016 diluted net earnings per share of $0.97, an increase of 29%. Core earnings per share were $0.86, a decrease of three percent, while currency-neutral core earnings per share were unchanged versus the prior year. Core operating profit margin increased 300 basis points driven primarily by productivity savings in gross margin. Net sales were $15.8 billion, a decrease of seven percent versus the prior year including a five percent negative impact from foreign exchange, a two percent impact from the Venezuela deconsolidation and a one percent impact from minor brand divestitures. Organic sales grew one percent.

Operating cash flow was $3.3 billion for the quarter. Adjusted free cash flow productivity was 105%. The Company repurchased $1.0 billion of common stock and returned $1.9 billion of cash to shareholders as dividends. Additionally, the Company acquired $4.2 billion of common stock with the closing of the Duracell transaction.

We continue to make progress on the transformations we are undertaking to return P&G to balanced top and bottom-line growth and maintain strong cash generation. We achieved a significant milestone this quarter in the transformation of the product portfolio with the sale of the Duracell business. We delivered another strong quarter of productivity improvement and cost savings, and we increased investments in innovation, advertising and selling to enhance our long-term prospects for faster, sustainable top-line growth and value creation” said President and Chief Executive Officer David Taylor.

January – March Quarter Discussion

Net sales in the third quarter of fiscal year 2016 were $15.8 billion, a seven percent decrease, including a negative five percentage point impact from foreign exchange and three percentage point impact from the combination of the Venezuela deconsolidation and minor brand divestitures. Organic sales increased one percent on organic shipment volume that was unchanged versus the prior year. Pricing increased total net sales by one percent. All-in volume declined two percent due to the Venezuela deconsolidation and minor brand divestitures.

Fiscal Year 2016 Guidance

P&G said it is maintaining its outlook for organic sales growth of in-line to up low-single digits versus fiscal 2015. The Company expects all-in sales to be down high-single digits in fiscal 2016, including a negative six to seven percentage point impact from foreign exchange and a two to three percentage point drag from the combined impacts of the Venezuela deconsolidation and minor brand divestitures.

With one quarter remaining in its fiscal year, the Company said it is tightening its outlook for Core EPS to a range of down three percent to six percent versus last year’s Core EPS of $3.76. P&G said it continues to expect constant-currency Core EPS growth in the mid-single digits. The Company continues to expect foreign exchange to have about a nine percentage point, or negative $0.35 per share, impact on Core EPS growth for the year. All-in GAAP earnings per share are expected to be up in the range of 46% to 51% versus the prior year.

P&G noted that fourth quarter Core EPS is expected to be significantly lower than prior year due to a combination of increased advertising investments, a higher tax rate, headwinds from foreign exchange and lower non-operating income.