Procter & Gamble (NYSE:PG) (P&G) on Tuesday raised its estimate for core earnings for the year after reporting a modest increase in sales, although second-quarter earnings were hit by an impairment charge for Gillette.
The owner of Olay, Pampers and Gillette said revenue in the three months to December 31, 2023 - its financial second quarter - rose 3% to $21.4 billion, with organic sales growth totaling 4%.
Sales growth was driven by a 4% benefit from higher pricing, partially offset by a 1% decrease in organic shipment volumes - mix had a neutral impact on sales for the quarter.
Grooming was the best-performing segment with sales up 9% on a year ago, while beauty segment organic sales increased 1%, health care by 2% and fabric and home care by 6%.
Diluted net EPS declined 12% from last year to $1.40, primarily due to a non-cash impairment of the carrying value of the Gillette brand.
In December, P&G said it would record up to $2.5 billion in charges over two financial years as it writes down the value of its Gillette business and restructures certain markets.
P&G said core net earnings per share were $1.84, an increase of 16% versus the prior year.
"We delivered strong results in the second quarter, enabling us to raise our core EPS growth guidance and maintain our top-line outlook for the fiscal year," said Jon Moeller, chair, president and CEO.
P&G maintained its guidance range for financial 2024 all-in sales growth to be in the range of 2-4% versus the prior year.
It also maintained its outlook for organic sales growth in the range of 4-5%.
But it lowered 2024 diluted net EPS growth from a range of 6-9% to a range of -1% to in-line versus financial 2023 EPS of $5.90.
This reflects the Gillette impairment.
More encouragingly, P&G raised its financial 2024 core net EPS growth from a range of 6-9% to a range of 8-9% versus financial 2023.
This outlook equates to a range of $6.37 to $6.43 per share.
The firm continues to expect unfavourable foreign exchange rates will be a headwind of approximately $1 billion after tax.
Shares rose 0.9% in pre-market trading.