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Procter & Gamble Co PG

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Procter & Gamble's Heft Proves Unwavering in Q2, but Pace of Gains Stands to Temper

Erin Lash, CFA Sector Director

Analyst Note

| Erin Lash, CFA |

Leading up to wide-moat Procter & Gamble’s second-quarter earnings release the overarching question remained anchored in whether it would be able to continue the string of mid- to high-single-digit organic sales marks that have come to characterize the results over the past two and a half years. And in that regard, the firm did not disappoint, posting an 8% underlying sales gain (driven by 5% higher volumes and a 3% benefit from increased prices and favorable mix), a far cry from the low-single-digit levels the business was chalking up just a few short years ago. But we don’t surmise P&G’s top-line momentum is the product of a shift in focus away from driving profitability improvement. P&G also boasted gross and operating margin expansion, up 150 and 250 basis points, respectively, to 53.1% and 27.2%, reflecting the benefit of sales leverage and productivity gains that offset a 7% increase in advertising for its leading brands.

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Company Profile

Business Description

Since its founding in 1837, Procter & Gamble has become one of the world's largest consumer product manufacturers, generating more than $70 billion in annual sales. It operates with a lineup of leading brands, including 21 that generate more than $1 billion in annual global sales such as Tide laundry detergent, Charmin toilet paper, Pantene shampoo, and Pampers diapers. P&G sold its last remaining food brand, Pringles, to Kellogg in calendar 2012. Sales outside its home turf represent around 55% of the firm's consolidated total, with around one third coming from emerging markets.

One Procter and Gamble Plaza
Cincinnati, OH, 45202
T +1 513 983-1100
Sector Consumer Defensive
Industry Household & Personal Products
Most Recent Earnings Sep 30, 2020
Fiscal Year End Jun 30, 2021
Stock Type High Yield
Employees 99,000