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Procter & Gamble Beats 1st-Quarter Earnings and Revenue Expectations

Procter and Gamble (NYSE:PG) released its first-quarter fiscal year 2020 earnings before the market opened on October 22. The company edged past Wall Street's top and bottom line expectations owing to robust sales of premium toothpaste as well as other high-end products. Higher prices in other categories also helped the company's results.

Having delivered strong revenue growth and profit margin expansion, the company has raised its outlook for the year.


Snapshot of the quarter

The consumer products giant recorded core earnings of $1.37 per share, up 22% from the prior-year quarter. Net sales amounted to $17.8 billion, which reflected a gain of 7% on a year over year basis. Analysts had anticipated earnings of $1.24 on $17.42 billion in revenue.

PG's CEO David Taylor said:

"We will continue executing our strategies of superiority, productivity, constructive disruption and improving P&G's organization and culture to deliver balanced top-line and bottom-line growth along with strong cash generation in a challenging competitive and macroeconomic environment."

Performance of business divisions

The beauty segment witnessed 10% sales growth in the reported quarter, barring the impact of currency and acquisition. This was driven by strong demand for its super-premium SK-II brand and its Olay skin care products, as well as higher prices.

The grooming division recorded a 1% organic sales decline. While organic sales of its shave care business remained flat as compared to the previous-year quarter, appliance organic sales improved by low single digits.

The health care segment experienced organic sales growth of 9% year on year thanks to product innovation and increased pricing, which improved results particularly in oral care and personal health care.

Financial guidance

Proctor and Gamble sees organic sales growth of 4% to 5% in the 2020 fiscal year. The company projects sales to grow by as much as 5%. It also projects core earnings per share growth of around 5% to 10%, which is more than its previous forecasted range of 4% to 9%.

The company said it would repurchase $6 billion to $8 billion worth of shares in fiscal 2020.

Disclosure: I do not hold any positions in the stocks mentioned.

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This article first appeared on GuruFocus.