Procter & Gamble Co. Earnings: Margins Shrink For Fifth Straight Quarter as Profit Falls

S&P 500 (NYSE:SPY) component Procter & Gamble Co. (NYSE:PG) reported its results for the second quarter. Procter & Gamble sells and markets consumer products such as pharmaceuticals, cleaning supplies, personal care, and pet supplies in more than 180 countries.

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Procter & Gamble Earnings Cheat Sheet for the Second Quarter

Results: Net income for the personal products company fell to $1.69 billion (57 cents per share) vs. $3.33 billion ($1.11 per share) a year earlier. This is a decline of 49.3% from the year earlier quarter.

Revenue: Rose 3.7% to $22.14 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: PG reported adjusted net income of $1.10 per share. By that measure, the company beat the mean estimate of $1.08 per share. Analysts were expecting revenue of $22.2 billion.

Quoting Management: “We continue to make progress against our key business priorities in a difficult macroeconomic environment,” said Chairman of the Board, President and Chief Executive Officer Bob McDonald. “We delivered solid top-line growth and continued to accelerate productivity improvements to drive down costs. With the easing of commodity cost comparisons over the next two quarters, continued solid top-line growth and cost savings progress, we expect operating profit growth to accelerate in the second half of the fiscal year.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 2.1 percentage points to 49.7% from the year earlier quarter. Over that time, margins have contracted on average 1.8 percentage points per quarter on a year-over-year basis.

Revenue has risen the past four quarters. Revenue increased 8.9% to $21.92 billion in the first quarter. The figure rose 10.2% in the fourth quarter of the last fiscal year from the year earlier and climbed 5.5% in the third quarter of the last fiscal year from the year-ago quarter.

The company has now seen net income fall in each of the last two quarters. In the first quarter, net income fell 1.9% from the year earlier quarter.

The company beat estimates last quarter after being in line with expectations in the first quarter with net income of $1.03 per share.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the third quarter has moved down from $1.07 a share to $1.05 over the last sixty days. For the fiscal year, the average estimate has moved down from $4.23 a share to $4.20 over the last thirty days.

Competitors to Watch: Church & Dwight Co., Inc. (NYSE:CHD), Colgate-Palmolive Company (NYSE:CL), The Clorox Company (NYSE:CLX), Kimberly-Clark Corporation (NYSE:KMB), Johnson & Johnson (NYSE:JNJ), Teva Pharmaceutical Industries Ltd (NASDAQ:TEVA), CCA Industries, Inc. (AMEX:CAW), and Zep, Inc. (NYSE:ZEP).

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com