Ahead Of Procter & Gamble's Q2 Results

(RTTNews) - Consumer goods giant The Procter & Gamble Co. (PG) sees fiscal 2016 to be a year, given market volatility, FX headwinds, and pricing, of modest top line growth, solid core operating income growth, robust constant currency core earnings per share growth, and strong 90% - 100% adjusted free cash flow productivity.

Amid the challenging environment, the company continues to strengthen its marketing, greater reach, higher frequency, greater effectiveness, at less overall cost. It also maintains its position as one of the strongest cash generators among competitive peers and comparable mega-cap companies. Over the past five years, P&G has returned $60 billion to shareholders and intend to pay dividends, retire shares, and repurchase shares worth up to $70 billion over just the next four years.

The company is also transforming its portfolio, and is shutting down older, more remote single-category production sites and building new multi-category facilities.

P&G expects second-quarter organic sales growth to be positive and to further strengthen in the back half. The company's Q2 results are due to be released before the bell on Tuesday, January 26. Analysts are looking for earnings of $0.98 per share on revenue of $16.94 billion for the quarter.

For fiscal 2016, P&G continues to project core earnings per share to be down slightly to up mid-single digits from restated $3.76 per share in fiscal 2015.

P&G also maintained its outlook for fiscal 2016 organic sales of in-line to up low single digits versus fiscal 2015. However, the company now expects all-in sales to be down high single digits, compared to its prior forecast for net sales decline in the low-to-mid single digit range.

Analysts polled by Thomson Reuters expect the company to report earnings of $3.75 per share on revenues of $65.89 billion for fiscal 2016.

In fiscal 2015, the company hiked its dividend for the 59th consecutive year and returned $11.9 billion in cash to shareholders, 105% of adjusted net earnings.

In the previous quarter...

The company reported upbeat profit for the first quarter, as lower expenses and higher margins offset a double-digit decline in sales due primarily to foreign exchange impacts. Also, increased volatility in market growth and foreign exchange rates have made earnings results more difficult to forecast, the company said.

First-quarter net earnings attributable to P&G rose to $2.60 billion or $0.91 per share from $1.99 billion or $0.69 per share in the prior-year period.

Core earnings from continuing operations were $0.98 per share, compared to $0.99 per share last year. On a currency-neutral basis, core earnings per share were $1.11 per share. Analysts expected earnings of $0.95 per share for the quarter.

Net sales declined 12% to $16.53 billion from $18.77 billion in the year-ago quarter. Analysts had a consensus revenue estimate of $17.17 billion.

The decline in sales include a negative nine percentage point impact from foreign exchange and two percentage point impact from the Venezuela deconsolidation and minor brand divestitures. Organic sales declined 1%.

Gross margin expanded 260 basis points to 50.7%, while operating margin rose 340 basis points to 22.8%.