Tumblelog by Soup.io
Newer posts are loading.
You are at the newest post.
Click here to check if anything new just came in.
beam5461

P&G Announces Second Quarter Earnings

CINCINNATI--(BUSINESS WIRE)--The Procter & Gamble Company (NYSE:PG) reported second quarter fiscal

year 2017 net sales of $16.9 billion, unchanged versus the prior year.

Organic sales increased two percent. Organic sales and organic volume

increased in all five business segments. Diluted net earnings per share

were $2.88, an increase of 157% versus the prior year, including a gain

of $1.95 per share from the Beauty Brands divestiture to Coty. Core

earnings per share were $1.08, an increase of four percent versus the

prior year. Currency-neutral core EPS increased nine percent versus the

prior year.

Operating cash flow was $3.0 billion for the quarter. Adjusted free cash

flow productivity was 82%. The Company returned $1.8 billion of cash to

shareholders as dividends, repurchased $1.5 billion of common stock and

exchanged shares with a value of $9.4 billion in the Beauty Brands

transaction.

"We delivered good results in the second quarter in a difficult

operating environment," said Chairman, President and Chief Executive

Officer David Taylor. "Stronger top-line performance in the first half

of the fiscal year is enabling us to increase our organic sales growth

outlook for the full year - another step towards the levels of balanced

top-line, bottom-line, and cash flow growth that will consistently put

P&G shareholder value creation among the best in our industry."

October - December Quarter Discussion

Net sales in the second quarter of fiscal year 2017 were $16.9 billion,

unchanged versus prior year, including a negative two percent impact

from foreign exchange. Organic sales increased two percent driven by a

two percent increase in organic shipment volume. Pricing and mix had no

net impact on sales for the quarter. All-in volume increased one percent

including the impacts of minor brand divestitures and lost sales to

Venezuelan subsidiaries.

October - December 2016

 

 

Foreign

 

 

 

 

Net

 

 

 

Organic

 

Organic

Net Sales Drivers*

Volume

Exchange

Price



Mix

Other**

Sales

Volume

Sales

Beauty

(1)%

(2)%

(1)%

2%

1%

(1)%

2%

3%

Grooming

3%

(2)%

1%

(4)%

1%

(1)%

4%

1%

Health Care

4%

(2)%

1%

2%

--%

5%

4%

7%

Fabric & Home Care

1%

(2)%

(1)%

--%

1%

(1)%

2%

1%

Baby, Feminine & Family Care

 

2%

 

(2)%

 

(1)%

 

(1)%

 

1%

 

(1)%

3%

 

1%

Total P&G

 

1%

 

(2)%

 

--%

 

--%

 

1%

 

--%

2%

 

2%

* Net sales percentage changes are approximations based on quantitative

formulas that are consistently applied.

** Other includes the sales

mix impact from acquisitions/divestitures and rounding impacts necessary

to reconcile volume to net sales.

Beauty segment organic sales increased three percent versus year ago

behind growth in both Hair Care and Skin & Personal Care. Organic

sales increased in Skin & Personal Care due to the continued growth of

the super-premium SK-II skin care brand. Organic sales increased in

Hair Care due to innovation and marketing support on the Pantene and

Head & Shoulders brands.

Grooming segment organic sales increased one percent due to

innovation-driven volume growth in both Shave Care and Appliances.

Organic sales increased low single digits globally in Shave Care as

higher volume outside the U.S. from innovation and increased marketing

support more than offset negative competitive impacts in the U.S.

Organic sales were up low single digits in Appliances driven by the

continued success of premium innovation across the top markets.

Health Care segment organic sales increased seven percent behind

higher organic volume in both Oral Care and Personal Health Care.

Product innovation drove a high single digit increase in organic sales

in Oral Care, while Personal Health Care organic sales increased low

single digits primarily due to market growth.

Fabric and Home Care segment organic sales increased one percent

versus year ago driven by higher volume from innovation and marketing

investments in Fabric Care along with increased pricing in Home Care.

Fabric Care and Home Care organic sales both increased low single

digits.

Baby, Feminine and Family Care segment organic sales increased one

percent driven by organic volume growth in all three businesses. Baby

care volume increased behind product innovation, increased marketing

support and market growth. Feminine Care and Family Care organic

volume growth was driven by product innovation. Organic sales

increased low single digits in Feminine Care and mid-single digits in

Family Care while decreasing low single digits in Baby Care due to

increased promotional investments.

Diluted net earnings per share from continuing operations were $0.93, a

decrease of eight percent versus the base period. Diluted net earnings

per share were $2.88, an increase of 157% versus the prior year. Current

year results included a $1.95 per share gain from discontinued

operations from the Beauty Brands divestiture to Coty, which closed on

October 1, 2016, non-core restructuring charges of $0.03 per share and a

non-core charge for early debt retirement of $0.13 per share. Core

earnings per share, which exclude non-core restructuring charges, early

debt retirement fees and the results of discontinued operations, were

$1.08, an increase of four percent versus the prior year.

Currency-neutral core earnings per share increased nine percent for the

quarter.



Reported gross margin increased 80 basis points, including a 10 basis

point benefit from lower non-core restructuring charges. Core gross

margin improved 70 basis points, including 50 basis points of negative

foreign exchange impacts. On a currency-neutral basis, core gross margin

increased 120 basis points, driven by 210 basis points of productivity

cost savings partially offset by headwinds from unfavorable mix and

commodity cost increases.

Selling, general and administrative expense (SG&A) as a percent of sales

increased 60 basis points on a reported basis versus the prior year,

including a 10 basis point net benefit from a year-on-year decline in

non-core restructuring charges. Core SG&A as a percentage of sales

increased 70 basis points, including 10 basis points of unfavorable

foreign exchange impacts. On a currency-neutral basis, core SG&A was up

60 basis points versus the prior year as increased investments in

marketing activities were partially offset by productivity savings.

Reported operating profit margin increased 20 basis points. Core

operating profit margin was in-line with the prior year, including 60

basis points of foreign exchange impacts. On a currency-neutral basis,

core operating profit margin increased 60 basis points driven by

productivity cost savings of 230 basis points for the quarter.

Fiscal Year 2017 Guidance

P&G said it is raising its guidance for organic sales growth from

approximately two percent to a range of two to three percent for fiscal

2017. The Company now expects the combined headwinds of foreign exchange

and minor brand divestitures to reduce sales growth by two to three

percentage points. As a result, P&G estimates all-in sales to be in line

with the prior fiscal year.

The Company maintained its expectation for core earnings per share

growth of mid-single digits versus fiscal 2016 core EPS of $3.67. All-in

GAAP earnings per share are expected to increase 48% to 50% versus

fiscal year 2016 GAAP EPS of $3.69. The fiscal 2017 GAAP EPS estimate

includes approximately $0.12 per share of non-core restructuring costs

and $0.13 per share of charges related to early debt retirement that was

executed in the second fiscal quarter. Also included in GAAP EPS is the

$1.95 gain from the divestiture of 41 Beauty Brands to Coty in a

transaction that was completed on October 1, 2016.

Forward-Looking Statements

Certain statements in this release or presentation, other than purely

historical information, including estimates, projections, statements

relating to our business plans, objectives, and expected operating

results, and the assumptions upon which those statements are based, are

"forward-looking statements" within the meaning of the Private

Securities Litigation Reform Act of 1995, Section 27A of the Securities

Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

These forward-looking statements generally are identified by the words

"believe," "project," "expect," "anticipate," "estimate," "intend,"

"strategy," "future," "opportunity," "plan," "may," "should," "will,"

"would," "will be," "will continue," "will likely result," and similar

expressions. Forward-looking statements are based on current

expectations and assumptions, which are subject to risks and

uncertainties that may cause results to differ materially from those

expressed or implied in the forward-looking statements. We undertake no

obligation to update or revise publicly any forward-looking statements,

whether because of new information, future events or otherwise.

Risks and uncertainties to which our forward-looking statements are

subject include, without limitation: (1) the ability to successfully

manage global financial risks, including foreign currency fluctuations,

currency exchange or pricing controls and localized volatility; (2) the

ability to successfully manage local, regional or global economic

volatility, including reduced market growth rates, and generate

sufficient income and cash flow to allow the Company to effect the

expected share repurchases and dividend payments; (3) the ability to

manage disruptions in credit markets or changes to our credit rating;

(4) the ability to maintain key manufacturing and supply arrangements

(including sole supplier and sole manufacturing plant arrangements) and

manage disruption of business due to factors outside of our control,

such as natural disasters and acts of war or terrorism; (5) the ability

to successfully manage cost fluctuations and pressures, including

commodity prices, raw materials, labor costs, energy costs and pension

and health care costs; (6) the ability to stay on the leading edge of

innovation, obtain necessary intellectual property protections and

successfully respond to technological advances attained by, and patents

granted to, competitors; (7) the ability to compete with our local and

global competitors in new and existing sales channels, including by

successfully responding to competitive factors such as prices,

promotional incentives and trade terms for products; (8) the ability to

manage and maintain key customer relationships; (9) the ability to

protect our reputation and brand equity by successfully managing real or

perceived issues, including concerns about safety, quality, ingredients,

efficacy or similar matters that may arise; (10) the ability to

successfully manage the financial, legal, reputational and operational

risk associated with third party relationships, such as our suppliers,

contractors and external business partners; (11) the ability to rely on

and maintain key information technology systems and networks (including

Company and third-party systems and networks) and maintain the security

and functionality of such systems and networks and the data contained

therein; (12) the ability to successfully manage regulatory and legal

requirements and matters (including, without limitation, those laws and

regulations involving product liability, intellectual property,

antitrust, privacy, tax, accounting standards and environmental) and to

resolve pending matters within current estimates; (13) the ability to

manage changes in applicable tax laws and regulations; (14) the ability

to successfully manage our portfolio optimization strategy, including

achieving and maintaining our intended tax treatment of the related

transactions, and our ongoing acquisition, divestiture and joint venture

activities, in each case to achieve the Company's overall business

strategy and financial objectives, without impacting the delivery of

base business objectives; (15) the ability to successfully achieve

productivity improvements and cost savings and manage ongoing

organizational changes, while successfully identifying, developing and

retaining particularly key employees, especially in key growth markets

where the availability of skilled or experienced employees may be

limited; and (16) the ability to manage the uncertain implications of

the United Kingdom's withdrawal from the European Union. For additional

information concerning factors that could cause actual results and

events to differ materially from those projected herein, please refer to

our most recent 10-K, 10-Q and 8-K reports.

About Procter & Gamble

P&G serves consumers around the world with one of the strongest

portfolios of trusted, quality, leadership brands, including Always®,

Ambi Pur®, Ariel®, Bounty®, Charmin®, Crest®, Dawn®, Downy®, Fairy®,

Febreze®, Gain®, Gillette®, Head & Shoulders®, Lenor®, Olay®, Oral-B®,

Pampers®, Pantene®, SK-II®, Tide®, Vicks®, and Whisper®. The P&G

community includes operations in approximately 70 countries worldwide.

Please visit http://www.pg.com for

the latest news and information about P&G and its brands.

 

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

(Amounts in Millions Except Per Share Amounts)

Consolidated Earnings Information

 

 

 

 

Three Months Ended December 31

 

Six Months Ended December 31

2016

 

2015

 

% Chg

 

2016

 

2015

 

% Chg

NET SALES

$

16,856

$

16,915

--

%

 

$

33,374

$

33,442

--

%

COST OF PRODUCTS SOLD

8,298

 

8,460

 

(2

)%

16,400

 

16,612

 

(1

)%

GROSS PROFIT

8,558

8,455

1

%

16,974

16,830

1

%

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE

4,683

 

4,602

 

2

%

9,328

 

9,209

 

1

%

OPERATING INCOME

3,875

3,853

1

%

7,646

7,621

--

%

INTEREST EXPENSE

122

143

(15

)%

253

283

(11

)%

INTEREST INCOME

42

58

(28

)%

77

102

(25

)%

OTHER NON-OPERATING INCOME/(LOSS), NET

(539

)

35

 

N/A

(476

)

17

 

N/A

EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

3,256

3,803

(14

)%

6,994

7,457

(6

)%

INCOME TAXES ON CONTINUING OPERATIONS

695

 

898

 

(23

)%

1,558

 

1,775

 

(12

)%

NET EARNINGS FROM CONTINUING OPERATIONS

2,561

 

2,905

 

(12

)%

5,436

 

5,682

 

(4

)%

NET EARNINGS FROM DISCONTINUED OPERATIONS

5,335

 

323

 

1,552

%

5,217

 

181

 

2,782

%

NET EARNINGS

7,896

 

3,228

 

145

%

10,653

 

5,863

 

82

%

LESS: NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTERESTS

21

 

22

 

(5

)%

64

 

56

 

14

%

NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE

$

7,875

 

$

3,206

 

146

%

$

10,589

 

$

5,807

 

82

%

 

EFFECTIVE TAX RATE

21.3

%

23.6

%

22.3

%

23.8

%

 

BASIC NET EARNINGS PER COMMON SHARE:*

EARNINGS FROM CONTINUING OPERATIONS

$

0.96

$

1.04

(8

)%

$

1.99

$

2.02

(1

)%

EARNINGS/(LOSS) FROM DISCONTINUED OPERATIONS

$

2.05

 

$

0.12

 

1,608

%

$

1.98

 

$

0.07

 

2,729

%

BASIC NET EARNINGS PER COMMON SHARE

$

3.01

 

$

1.16

 

159

%

$

3.97

 

$

2.09

 

90

%

DILUTED NET EARNINGS PER COMMON SHARE:*

EARNINGS FROM CONTINUING OPERATIONS

$

0.93

$

1.01

(8

)%

$

1.93

$

1.97

(2

)%

EARNINGS/(LOSS) FROM DISCONTINUED OPERATIONS

$

1.95

 

$

0.11

 

1,673

%

$

1.88

 

$

0.06

 

3,033

%

DILUTED NET EARNINGS PER COMMON SHARE

$

2.88

 

$

1.12

 

157

%

$

3.81

 

$

2.03

 

88

%

DIVIDENDS PER COMMON SHARE

$

0.6695

$

0.6629

$

1.3390

$

1.3258

DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

2,737.6

2,864.6

2,780.2

2,865.8

 

COMPARISONS AS A % OF NET SALES

Basis Pt Chg

 

Basis Pt Chg

GROSS MARGIN

50.8%

50.0%

80

50.9%

50.3%

60

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE

27.8%

27.2%

60

27.9%

27.5%

40

OPERATING MARGIN

23.0%

22.8%

20

22.9%

22.8%

10

EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

19.3%

22.5%

(320)

21.0%

22.3%

(130)

NET EARNINGS FROM CONTINUING OPERATIONS

15.2%

17.2%

(200)

16.3%

17.0%

(70)

NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE

46.7%

19.0%

2,770

31.7%

17.4%

1,430

* Basic net earnings per common share and Diluted net earnings per

common share are calculated on Net earnings attributable to Procter &

Gamble.

 

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

(Amounts in Millions)

Consolidated Earnings Information

 

 

Three Months Ended December 31, 2016

 

% Change

 

Earnings/(Loss) from

 

% Change

 

Net Earnings/(Loss)

 

% Change

Versus Year

Continuing Operations

Versus Year

from Continuing

Versus Year

Net Sales

 

Ago

 

Before Income Taxes

 

Ago

 

Operations

 

Ago

Beauty

$

2,942

(1

)%

$

714

(8

)%

$

540

(8

)%

Grooming

1,789

(1

)%

614

6

%

469

6

%

Health Care

2,072

5

%

608

8

%

422

7

%

Fabric & Home Care

5,270

(1

)%

1,125

(4

)%

725

(6

)%

Baby, Feminine & Family Care

4,645

(1

)%

1,038

--

%

680

--

%

Corporate

138

 

24

%

(843

)

N/A

(275

)

N/A

Total Company

$

16,856

 

--

%

$

3,256

 

(14

)%

$

2,561

 

(12

)%

 

 

Three Months Ended December 31, 2016

(Percent Change vs. Year Ago)*

Volume with

 

Volume Excluding

 

 

 

 

 

Acquisitions &

Acquisitions &

Foreign

Net Sales

Divestitures

 

Divestitures

 

Exchange

 

Price

 

Mix

 

Other**

 

Growth

Beauty

(1)%

2%

(2)%

(1)%

2%

1%

(1)%

Grooming

3%

4%

(2)%

1%

(4)%

1%

(1)%

Health Care

4%

4%

(2)%

1%

2%

--%

5%

Fabric & Home Care

1%

2%

(2)%

(1)%

--%

1%

(1)%

Baby, Feminine & Family Care

2%

 

3%

 

(2)%

 

(1)%

 

(1)%

 

1%

 

(1)%

Total Company

1%

 

2%

 

(2)%

 

--%

 

--%

 

1%

 

--%

 

 

Six Months Ended December 31, 2016

 

% Change

 

Earnings/(Loss) from

 

% Change

 

Net Earnings/(Loss)

 

% Change

Versus Year

Continuing Operations

Versus Year

from Continuing

Versus Year

Net Sales

 

Ago

 

Before Income Taxes

 

Ago

 

Operations

 

Ago

Beauty

$

5,938

(1

)%

$

1,497

(6

)%

$

1,132

(6

)%

Grooming

3,447

(1

)%

1,143

6

%

884

6

%

Health Care

3,933

4

%

1,104

9

%

742

4

%

Fabric & Home Care

10,572

--

%

2,254

(2

)%

1,453

(4

)%

Baby, Feminine & Family Care

9,240

(1

)%

2,083

(3

)%

1,377

(4

)%

Corporate

244

 

12

%

(1,087

)

N/A

(152

)

N/A

Total Company

$

33,374

 

--

%

$

6,994

 

(6

)%

$

5,436

 

(4

)%

 

 

Six Months Ended December 31, 2016

(Percent Change vs. Year Ago)*

Volume with

 

Volume Excluding

 

 

 

 

 

Acquisitions &

Acquisitions &

Foreign

Net Sales

Divestitures

 

Divestitures

 

Exchange

 

Price

 

Mix

 

Other**

 

Growth

Beauty

(2)%

2%

(2)%

--%

2%

1%

(1)%

Grooming

2%

3%

(2)%

1%

(2)%

--%

(1)%

Health Care

4%

5%

(2)%

1%

1%

--%

4%

Fabric & Home Care

1%

3%

(2)%

(1)%

1%

1%

--%

Baby, Feminine & Family Care

3%

 

3%

 

(2)%

 

(1)%

 

--%

 

(1)%

 

(1)%

Total Company

1%

 

2%

 

(2)%

 

--%

 

--%

 

1%

 

--%

* Net sales percentage changes are approximations based on quantitative

formulas that are consistently applied.

** Other includes the sales

mix impact from acquisitions/divestitures and rounding impacts necessary

to reconcile volume to net sales.

 

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

(Amounts in Millions Except Per Share Amounts)

Consolidated Statements of Cash Flows

 

 

Six Months Ended December 31

2016

 

2015

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

$

7,102

$

6,836

OPERATING ACTIVITIES

NET EARNINGS

10,653

5,863

DEPRECIATION AND AMORTIZATION

1,435

1,454

LOSS ON EARLY EXTINGUISHMENT OF DEBT

543

--

SHARE-BASED COMPENSATION EXPENSE

104

140

DEFERRED INCOME TAXES

(448

)

140

GAIN ON SALE OF BUSINESSES

(5,343

)

(37

)

GOODWILL AND INTANGIBLE ASSET IMPAIRMENT CHARGES

--

402

CHANGES IN:

ACCOUNTS RECEIVABLE

(595

)

(488

)

INVENTORIES

(247

)

(386

)

ACCOUNTS PAYABLE, ACCRUED AND OTHER LIABILITIES

(296

)

322

OTHER OPERATING ASSETS & LIABILITIES

152

374

OTHER

67

 

234

 

TOTAL OPERATING ACTIVITIES

6,025

 

8,018

 

INVESTING ACTIVITIES

CAPITAL EXPENDITURES

(1,429

)

(1,223

)

PROCEEDS FROM ASSET SALES

280

80

ACQUISITIONS, NET OF CASH ACQUIRED

(16

)

(186

)

PURCHASES OF SHORT-TERM INVESTMENTS

(1,739

)

(762

)

PROCEEDS FROM SALES OF SHORT-TERM INVESTMENTS

354

683

PRE-DIVESTITURE ADDITION OF RESTRICTED CASH RELATED TO THE BEAUTY

BRANDS DIVESTITURE

(874

)

--

CASH TRANSFERRED AT CLOSING TO THE DISCONTINUED BEAUTY BUSINESS

(475

)

--

RELEASE OF RESTRICTED CASH UPON CLOSING OF THE BEAUTY BRANDS

DIVESTITURE

1,870

--

CHANGE IN OTHER INVESTMENTS

8

 

(31

)

TOTAL INVESTING ACTIVITIES

(2,021

)

(1,439

)

FINANCING ACTIVITIES

DIVIDENDS TO SHAREHOLDERS

(3,637

)

(3,733

)

CHANGE IN SHORT-TERM DEBT

2,715

2,020

ADDITIONS TO LONG-TERM DEBT

2,641

1,721

REDUCTIONS OF LONG-TERM DEBT

(5,029

)

(1)

(2,239

)

TREASURY STOCK PURCHASES

(2,503

)

(2,503

)

IMPACT OF STOCK OPTIONS AND OTHER

1,074

 

1,007

 

TOTAL FINANCING ACTIVITIES

(4,739

)

(3,727

)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

(316

)

(285

)

CHANGE IN CASH AND CASH EQUIVALENTS

(1,051

)

2,567

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

$

6,051

 

$

9,403

 

(1) Includes $543 of costs related to early extinguishment of

debt.

 

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

(Amounts in Millions Except Per Share Amounts)

Condensed Consolidated Balance Sheets

 

 

 

 

December 31, 2016

June 30, 2016

CASH AND CASH EQUIVALENTS

$

6,051

$

7,102

AVAILABLE-FOR-SALE INVESTMENTS SECURITIES

7,403

6,246

ACCOUNTS RECEIVABLE

4,729

4,373

INVENTORIES

4,787

4,716

DEFERRED INCOME TAXES

--

1,507

PREPAID EXPENSES AND OTHER CURRENT ASSETS

2,602

2,653

CURRENT ASSETS HELD FOR SALE

--

 

7,185

TOTAL CURRENT ASSETS

25,572

33,782

PROPERTY, PLANT AND EQUIPMENT, NET

18,778

19,385

GOODWILL

43,458

44,350

TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET

24,185

24,527

OTHER NONCURRENT ASSETS

5,040

 

5,092

TOTAL ASSETS

$

117,033

 

$

127,136

 

ACCOUNTS PAYABLE

$

8,300

$

9,325

ACCRUED AND OTHER LIABILITIES

7,584

7,449

CURRENT LIABILITIES HELD FOR SALE

--

2,343

DEBT DUE WITHIN ONE YEAR

13,007

 

11,653

TOTAL CURRENT LIABILITIES

28,891

30,770

LONG-TERM DEBT

16,460

18,945

DEFERRED INCOME TAXES

8,692

9,113

OTHER NONCURRENT LIABILITIES

9,246

 

10,325

TOTAL LIABILITIES

63,289

 

69,153

TOTAL SHAREHOLDERS' EQUITY

53,744

 

57,983

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

117,033

 

$

127,136

 

The Procter & Gamble Company

Exhibit 1: Non-GAAP Measures

In accordance with the SEC's Regulation G, the following provides

definitions of the non-GAAP measures used in Procter & Gamble's

January 20, 2017 earnings release and the reconciliation to the most

closely related GAAP measure. We believe that these measures provide

useful perspective on underlying business trends (i.e. trends excluding

non-recurring or unusual items) and results and provide a supplemental

measure of year-on-year results. The non-GAAP measures described below

are used by Management in making operating decisions, allocating

financial resources and for business strategy purposes. These measures

may be useful to investors as they provide supplemental information

about business performance and provide investors a view of our business

results through the eyes of management. These measures are also used to

evaluate senior management and are a factor in determining their at-risk

compensation. These non-GAAP measures are not intended to be considered

by the user in place of the related GAAP measure, but rather as

supplemental information to our business results. These non-GAAP

measures may not be the same as similar measures used by other companies

due to possible differences in method and in the items or events being

adjusted.

The Core earnings measures included in the following reconciliation

tables refer to the equivalent GAAP measures adjusted as applicable for

the following items:

Incremental restructuring: The Company has

had and continues to have an ongoing level of restructuring activities.

Such activities have resulted in ongoing annual restructuring related

charges of approximately $250 - $500 million before tax. Beginning in

2012 Procter & Gamble began a $10 billion strategic productivity and

cost savings initiative that includes incremental restructuring

activities. This results in incremental restructuring charges to

accelerate productivity efforts and cost savings. The adjustment to Core

earnings includes only the restructuring costs above what we believe are

the normal recurring level of restructuring costs.

Early debt extinguishment charges: During

the three months ended December 31, 2016, the Company recorded a charge

of $345 million after tax due to the early extinguishment of certain

long-term debt. This charge represents the difference between the

reacquisition price and the par value of the debt extinguished.

Management does not view this charge as indicative of the Company's

operating performance or underlying business results.

We do not view the above items to be part of our sustainable results and

their exclusion from Core earnings measures provides a more comparable

measure of year-on-year results. Both of these items are also excluded

when evaluating senior management in determining their at-risk

compensation.

Organic sales growth: Organic sales growth

is a non-GAAP measure of sales growth excluding the impacts of

acquisitions, divestitures and foreign exchange from year-over-year

comparisons. Management believes this measure provides investors with a

supplemental understanding of underlying sales trends by providing sales

growth on a consistent basis.

Core operating profit margin: Core

operating profit margin is a measure of the Company's operating margin

adjusted for items as indicated. Management believes this non-GAAP

measure provides a supplemental perspective to the Company's operating

efficiency over time.

Core gross margin: Core gross margin is a

measure of the Company's gross margin adjusted for items as indicated.

Management believes this non-GAAP measure provides a supplemental

perspective to the Company's operating efficiency over time.

Core EPS and currency-neutral Core EPS:

Core earnings per share, or Core EPS, is a measure of the Company's

diluted net earnings per share from continuing operations adjusted as

indicated. Currency-neutral Core EPS is a measure of the Company's Core

EPS excluding the incremental current year impact of foreign exchange.

Management views these non-GAAP measures as a useful supplemental

measure of Company performance over time.

Adjusted free cash flow: Adjusted free cash

flow is defined as operating cash flow less capital spending and

excluding tax payments related to the Beauty Brands divestiture, which

are non-recurring and not considered indicative of underlying cash flow

performance. Adjusted free cash flow represents the cash that the

Company is able to generate after taking into account planned

maintenance and asset expansion. Management views adjusted free cash

flow as an important measure because it is one factor used in

determining the amount of cash available for dividends and discretionary

investment.

Adjusted free cash flow productivity:

Adjusted free cash flow productivity is defined as the ratio of adjusted

free cash flow to net earnings excluding the loss on early debt

extinguishment and gain on the sale of the Beauty Brands, which are

non-recurring and not considered indicative of underlying earnings

performance. Management views adjusted free cash flow productivity as a

useful measure to help investors understand P&G's ability to generate

cash. Adjusted free cash flow productivity is used by management in

making operating decisions, allocating financial resources and for

budget planning purposes. The Company's long-term target is to generate

annual adjusted free cash flow productivity at or above 90 percent.

 

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

(Amounts in Millions Except Per Share Amounts)

Reconciliation of Non-GAAP Measures

 

Three Months Ended December 31, 2016

 

AS REPORTED

 

DISCONTINUED

 

INCREMENTAL

 

EARLY DEBT

 

 

NON-GAAP

(GAAP)

OPERATIONS

RESTRUCTURING

EXTINGUISHMENT

ROUNDING

(CORE)

COST OF PRODUCTS SOLD

8,298

--

(128

)

--

--

8,170

GROSS PROFIT

8,558

--

128

--

--

8,686

GROSS MARGIN

50.8

%

--

%

0.8

%

--

%

(0.1

)%

51.5

%

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSE

4,683

--

36

--

1

4,720

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE AS A % OF NET SALES

27.8

%

--

%

0.2

%

--

%

--

%

28.0

%

OPERATING INCOME

3,875

--

92

--

(1

)

3,966

OPERATING PROFIT MARGIN

23.0

%

--

%

0.5

%

--

%

--

%

23.5

%

INCOME TAX ON CONTINUING OPERATIONS

695

--

21

198

(1

)

913

NET EARNINGS ATTRIBUTABLE TO P&G

7,875

(5,335

)

71

345

--

2,956

EFFECTIVE TAX RATE

21.3

%

--

%

--

%

2.2

%

--

%

23.5

%

 

 

 

 

 

 

 

 

 

 

Core EPS:

DILUTED NET EARNINGS PER COMMON SHARE*

2.88

 

 

(1.95

)

 

0.03

 

 

0.13

 

 

(0.01

)

 

1.08

 

CURRENCY IMPACT TO CORE EARNINGS

0.05

CURRENCY-NEUTRAL CORE EPS

 

1.13

 

* Diluted net earnings per share are calculated on Net earnings

attributable to Procter & Gamble.

 

 

CHANGE VERSUS YEAR AGO

 

 

 

 

CORE GROSS MARGIN

70

BPS

CORE SELLING GENERAL & ADMINISTRATIVE EXPENSE AS A % OF NET SALES

70

BPS

CORE OPERATING PROFIT MARGIN

--

BPS

CORE EFFECTIVE TAX RATE

(10

)

BPS

CORE EPS

4

%

CURRENCY-NEUTRAL CORE EPS

9

%

 

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

(Amounts in Millions Except Per Share Amounts)

Reconciliation of Non-GAAP Measures

 

Three Months Ended December 31, 2015

 

AS REPORTED

 

DISCONTINUED

 

INCREMENTAL

 

 

NON-GAAP

(GAAP)

OPERATIONS

RESTRUCTURING

ROUNDING

(CORE)

COST OF PRODUCTS SOLD

8,460

--

(143

)

--

8,317

GROSS PROFIT

8,455

--

143

--

8,598

GROSS MARGIN

50.0

%

--

%

0.8

%

--

%

50.8

%

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSE

4,602

--

14

--

4,616

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE AS A % OF NET SALES

27.2

%

--

%

0.1

%

--

%

27.3

%

OPERATING INCOME

3,853

--

129

--

3,982

OPERATING PROFIT MARGIN

22.8

%

--

%

0.8

%

(0.1

)%

23.5

%

INCOME TAX ON CONTINUING OPERATIONS

898

--

30

(1

)

927

NET EARNINGS ATTRIBUTABLE TO P&G

3,206

(323

)

99

1

2,983

EFFECTIVE TAX RATE

23.6

%

--

%

--

%

--

%

23.6

%

 

 

 

 

 

 

 

 

Core EPS:

DILUTED NET EARNINGS PER COMMON SHARE*

1.12

 

 

(0.11

)

 

0.03

 

 

--

 

 

1.04

 

* Diluted net earnings per share are calculated on Net earnings

attributable to Procter & Gamble.

 

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

(Amounts in Millions Except Per Share Amounts)

Reconciliation of Non-GAAP Measures

 

Six Months Ended December 31, 2016

 

AS REPORTED

 

DISCONTINUED

 

INCREMENTAL

 

EARLY DEBT

 

 

NON-GAAP

(GAAP)

OPERATIONS

RESTRUCTURING

EXTINGUISHMENT

ROUNDING

(CORE)

COST OF PRODUCTS SOLD

16,400

--

(239

)

--

--

16,161

GROSS PROFIT

16,974

--

239

--

--

17,213

GROSS MARGIN

50.9

%

--

%

0.7

%

--

%

--

%

51.6

%

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSE

9,328

--

59

--

--

9,387

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE AS A % OF NET SALES

27.9

%

--

%

0.2

%

--

%

--

%

28.1

%

OPERATING INCOME

7,646

--

180

--

--

7,826

OPERATING PROFIT MARGIN

22.9

%

--

%

0.5

%

--

%

--

%

23.4

%

INCOME TAX ON CONTINUING OPERATIONS

1,558

--

36

198

--

1,792

NET EARNINGS ATTRIBUTABLE TO P&G

10,589

(5,217

)

144

345

--

5,861

EFFECTIVE TAX RATE

22.3

%

--

%

(0.1

)%

1.0

%

0.1

%

23.2

%

 

 

 

 

 

 

 

 

 

 

Core EPS:

DILUTED NET EARNINGS PER COMMON SHARE*

3.81

 

 

(1.88

)

 

0.05

 

 

0.12

 

 

0.01

 

 

2.11

 

CURRENCY IMPACT TO CORE EARNINGS

0.12

CURRENCY-NEUTRAL CORE EPS

 

2.23

 

* Diluted net earnings per share are calculated on Net earnings

attributable to Procter & Gamble.

 

 

CHANGE VERSUS YEAR AGO

 

 

 

CORE GROSS MARGIN

60

BPS

CORE SELLING GENERAL & ADMINISTRATIVE EXPENSE AS A % OF NET SALES

50

BPS

CORE OPERATING PROFIT MARGIN

--

BPS

CORE EFFECTIVE TAX RATE

(60

)

BPS

CORE EPS

4

%

CURRENCY-NEUTRAL CORE EPS

10

%

 

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

(Amounts in Millions Except Per Share Amounts)

Reconciliation of Non-GAAP Measures

 

Six Months Ended December 31, 2015

 

AS REPORTED

 

DISCONTINUED

 

INCREMENTAL

 

 

NON-GAAP

(GAAP)

OPERATIONS

RESTRUCTURING

ROUNDING

(CORE)

COST OF PRODUCTS SOLD

16,612

--

(215

)

--

16,397

GROSS PROFIT

16,830

--

215

--

17,045

GROSS MARGIN

50.3

%

--

%

0.6

%

0.1

%

51.0

%

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSE

9,209

--

14

--

9,223

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE AS A % OF NET SALES

--

%

--

%

0.1

%

27.6

%

OPERATING INCOME

7,621

--

201

--

7,822

OPERATING PROFIT MARGIN

22.8

%

--

%

0.6

%

--

%

23.4

%

INCOME TAX ON CONTINUING OPERATIONS

1,775

--

44

--

1,819

NET EARNINGS ATTRIBUTABLE TO P&G

5,807

(181

)

157

--

5,783

EFFECTIVE TAX RATE

23.8

%

--

%

(0.1

)%

0.1

%

23.8

%

 

 

 

 

 

 

 

 

Core EPS:

DILUTED NET EARNINGS PER COMMON SHARE*

2.03

 

 

(0.06

)

 

0.05

 

 

--

 

 

2.02

 

* Diluted net earnings per share are calculated on Net earnings

attributable to Procter & Gamble.

 

 

 

 

 

 

 

Organic sales growth:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign Exchange

Acquisition/Divestiture

Organic Sales

October - December 2016

Net Sales Growth

Impact

Impact*

Growth

Beauty

(1)%

2%

2%

3%

Grooming

(1)%

2%

--%

1%

Health Care

5%

2%

--%

7%

Fabric & Home Care

(1)%

2%

--%

1%

Baby, Feminine & Family Care

 

(1)%

 

 

2%

 

 

--%

 

 

1%

Total P&G

 

--%

 

 

2%

 

 

--%

 

 

2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Combined Foreign Exchange &

 

 

 

Organic Sales

Total P&G

Net Sales Growth

Acquisition/Divestiture Impact*

http://issuu.com/hurriedtechniqu19/docs/the_makuya_movement_in_israel-639

Growth

FY 2017

(Estimate)

 

 

 

Flat

 

 

 

Approximately 2% to 3%

 

 

 

2% to 3%

* Acquisition/Divestiture Impact includes the mix impacts of

acquisitions and divestitures and rounding impacts necessary to

reconcile net sales to organic sales.

 

 

 

 

 

 

Core EPS:

 

 

 

 

 

 

 

 

 

 

Diluted EPS

Total P&G

Growth

Impact of Incremental Non-Core Items*

Core EPS Growth

FY 2017

Up mid-single

(Estimate)

 

 

Up 48% to 50%

 

 

Approximately (44%)

 

 

digits

* Includes change in discontinued operations (includes gain on sale of

Beauty Brands).

 

Adjusted free cash flow (dollar amounts in

millions):

 

Three Months Ended December 31, 2016

 

 

 

 

 

 

 

Cash Tax Payment -

 

 

Adjusted Free Cash

Operating Cash Flow

Capital Spending

Free Cash Flow

Beauty Sale

Flow

$3,000

 

 

$(745)

 

 

$2,255

 

 

$129

 

 

$2,384

 

Adjusted free cash flow productivity (dollar

amounts in millions) :

 

Three Months Ended December 31, 2016

 

Adjusted Free

 

 

 

 

Loss on Early Debt

 

 

Gain on Sale of

 

 

Adjusted Net

 

 

Adjusted Free Cash

Cash Flow

Net Earnings

Extinguishment

Beauty Brands

Earnings

Flow Productivity

$2,384

 

 

$7,896

 

 

$345

 

 

$(5,335)

 

 

$2,906

 

 

82%

http://www.n-tv.de/

http://www.google.de/

http://www.sabc.co.za/news

Don't be the product, buy the product!

Schweinderl