Procter & Gamble (NYSE:PG) said it will book charges of between $2 billion and $2.5 billion over the next two years as it restructures its business operations in some markets and writes down the value of its Gillette business.
In a filing to the Securities and Exchange Commission (SEC), the consumer goods group said it was restructuring business operations in Enterprise Markets including Argentina and Nigeria to address challenging macroeconomic and fiscal conditions. As a result, it said it expected to record incremental restructuring charges of $1 to $1.5 billion after tax.
It said it expected to recognize the restructuring charges in the fiscal years ending June 30, 2024 and 2025, with initial charges recognized in the quarter ending December 31, 2023.
Connected to the restructuring program, P&G noted that it will record an after-tax non-cash impairment charge of $1 billion on intangible assets it acquired as part of its 2005 acquisition of The Gillette Company.
This was due to a reduction in the estimated fair value of the asset due to a higher discount rate, the weakening of several currencies relative to the US dollar and the impact of the Enterprise Markets restructuring.
“Underlying performance of the Gillette business remains strong,” P&G commented. “However, future adverse changes in the business or macroeconomic environment may trigger a further impairment charge.”
P&G’s shares were down 2.7% at $147.98 by midday in New York.
Contact the author at stephen.gunnion@proactiveinvestors.com