Procter & Gamble: This Giant Keeps Getting Bigger

| About: The Procter (PG)

Procter & Gamble Co. (NYSE:PG) released its fiscal second quarter results, and they were impressive. Furthermore, it raised earnings guidance for the remainder of the fiscal year. Management is confident things are going to get even better.

Here are some numbers

Quarterly profits were up 12% from the same period last year. Actual profits were 84 cents a share or $2.86 billion vs. 72 cents a share or $2.55 billion last year. Analysts thought the earnings per share would be 83 cents. Sales increased in every division with operating margins improving as volume grew. In real dollars: revenues were $19.73 billion, last year in the same quarter: $18.3 billion. That's for three months. Higher prices to the consumer and cost-cutting overwhelmed the increased prices paid for commodities.

Organic growth of earnings was good at 5%, within the band of 4% and 7% analysts forecast. Organic growth is growth that excludes acquisitions for the year. In other words, the ongoing business. While P&G is an active acquisitor, it's also a well run company, improving earnings from its core businesses which include Tide, Olay, and Gillette. Fabric and home care sales increased by 11% in sales and 8% in volume. In this group, the leaders were Tide Simple Pleasures and new Swiffer products. Gillette also made a significant contribution with blade and razor sales going up by 11% to $1.28 billion. Sales in the beauty segment were higher by 8% while health-care products increased 7%. Pantene shampoo and Olay skin care are in the former division while Crest is in the latter.

Look for earnings for the fiscal year to range between $2.99 to $3.03 a share. That's an improvement on the last forecast from management which was $2.97 to $3.02. For the next quarter, expect 74 cents.

P&G is a giant and getting larger every day. Its products are basic necessities that have strong brands. Each has a high quality image which contributes to higher price points than many competitors. And management is ever evolving this behemoth, selling certain underperforming divisions and adding new products all the time. The evolution should continue, and investors will most likely benefit from it.

Here are just some of the products that P&G owns: Clairol, Old Spice, Secret, Sure, Herbal Essence, Charmin, Dreft, Luvs, Pampers, Metamucil, Pepto-Bismol, Prilosec OTC, ThermaCare, Vicks, Camay, Ivory, Noxzema, Safeguard, Zest, Eukanuba, Iams, Bounty, Mr. Clean, Swiffer, Duracell batteries, Bounce, Cheer, Downy, Tide, CoverGirl, Gain, Braun, Cascade, Dawn, Joy, Fixodent, Gleem, Always, Tampax, Scope, Oral-B, Puffs, Aussie, Head & Shoulders.

PG 1-yr chart

Disclosure: Author has no position in PG.

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