PG Financial Analysis

Analysis Date: 1/24/2025

Business Model

P&G generates revenue through sales of consumer products across multiple categories including Beauty, Grooming, Health Care, Fabric & Home Care, and Baby, Feminine & Family Care

Revenue Sources

• Beauty: Hair Care, Skin Care & Personal Care
• Grooming: Shaving products and appliances
• Health Care: Oral Care & Personal Health Care
• Fabric & Home Care: Fabric Care & Home Care products
• Baby, Feminine & Family Care: Baby Care, Feminine Care & Family Care products

Income Statement Analysis

• Net sales increased 2% driven by 2% organic volume growth and 1% favorable mix
• Gross margin declined 30 basis points to 52.4% due to higher commodity costs and unfavorable mix
• SG&A increased 40 basis points to 26.2% of sales due to increased marketing investments

Balance Sheet Analysis

• Strong cash position with $10.2B in cash and equivalents
• Total assets remained relatively flat at $122.6B
• Shareholders' equity increased 1.7% to $51.4B

Cash Flow Analysis

• Operating cash flow of $4.8B with adjusted free cash flow productivity of 84%
• Returned $4.9B to shareholders through $2.4B dividends and $2.5B share repurchases

Capital Allocation

P&G maintains balanced capital allocation focusing on dividends (~$10B planned for FY25), share repurchases ($6-7B planned), and capital investments (4-5% of sales). The company targets 90% adjusted free cash flow productivity.

Management Commentary

Delivered acceleration in organic sales growth, core EPS growth and strong cash return

First-half results on track to deliver within guidance ranges on key metrics

Facing headwinds from commodities ($200M) and foreign exchange ($300M)

Overall Sentiment: Cautiously optimistic, focused on executing integrated growth strategy while managing through headwinds

Recommendation

Rating: Hold

Reason for Rating: Stable performance but facing near-term headwinds from costs and currency

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/24/2025, 4:17:47 AM