Procter & Gamble (PG) shares are taking a hit in premarket trading despite the company delivering slightly better-than-expected first-quarter earnings. The consumer goods giant reported adjusted earnings per share (EPS) of $1.93, exceeding analyst consensus of $1.90. However, revenue came in at $21.74 billion, missing the estimated $21.91 billion.
Despite the revenue miss, Procter & Gamble’s organic sales, which exclude the impact of foreign exchange and acquisitions, grew by 2%. This growth was fueled by a 1% increase in pricing and a 1% rise in organic volume. However, the company saw sales declines in some key segments. The Beauty segment reported a 5% drop in sales, while the Baby, Feminine & Family Care segment declined by 2%. Meanwhile, the Grooming segment remained flat, while Fabric & Home Care grew 1%, and Health Care sales rose 2%.
Procter & Gamble’s gross profit held steady at $11.3 billion, with the gross margin expanding by 10 basis points to 52.1%. The core gross margin remained flat year-over-year. This stability was attributed to productivity savings and pricing gains offset by higher commodity costs, unfavorable mix, and product reinvestments. Operating margin expanded by 30 basis points to 26.7%, with operating income for the quarter increasing by 1% to $5.80 billion.
Looking ahead, Procter & Gamble reaffirmed its fiscal year 2025 guidance for all-in sales growth of 2% to 4% and organic sales growth of 3% to 5%. This outlook translates to FY25 revenue of $85.72 billion to $87.40 billion, compared to an estimate of $86.06 billion. The company also confirmed its adjusted EPS guidance of $6.91 to $7.05, aligning with the consensus of $6.97. Procter & Gamble reiterated its target for adjusted free cash flow productivity of 90%, along with plans to distribute around $10 billion in dividends and repurchase $6 billion to $7 billion of common shares in fiscal 2025.
Investors seeking exposure to Procter & Gamble can consider ETFs such as the iShares U.S. Consumer Staples ETF (IYK) and Fidelity MSCI Consumer Staples Index ETF (FSTA).
Despite the positive earnings results, Procter & Gamble’s stock is currently down 0.81% at $170.88 in premarket trading. Investors are likely cautious about the company’s revenue miss and the mixed performance across different segments. It remains to be seen how the market will react to Procter & Gamble’s outlook and its continued focus on driving growth through its integrated strategy.
