Procter & Gamble surpassed Wall Street estimates on earnings but fell slightly short on sales. The lackluster sales growth is likely to give activist investor Nelson Peltz ammunition in his continuing battle against P&G.
The consumer products giant is coming off the biggest ever proxy fight, in which it beat Nelson Peltz’s bid to get on the board by a razor-thin margin. Peltz, who continues to contest the election results, has said he will continue to pressure the company giant from the sidelines.
Here’s what P&G reported compared to what Wall Street expected:
- EPS: Adjusted $1.09 vs. $1.08 expected, according to Thomson Reuters
- Revenue: $16.653 billion vs. $16.698 billion expected, according to Thomson Reuters
Peltz has critiqued P&G for market share losses, lack of innovation, and weak sales. The Bounty paper towel owner has said it’s in the midst of a turnaround, which will address these complaints, but it needs more time to see the fruits of its labor.
In the latest quarter, P&G’s biggest sales weakness was in grooming, its Gillette shaving business, which reported a 5 percent drop in net sales. Peltz has said P&G was not being quick enough on its feet to compete against upstart rivals like Dollar Shave Club.
Still, it posted strong results in its other categories, including beauty and household products.
The company reported revenue of $16.65 billion compared $16.70 billion expected, according to Thomson Reuters. That marks a 1 percent growth from the year prior.
Organic sales, which strips out changes in currency moves, also rose 1 percent.
“We delivered organic sales growth in a decelerating global market and against a relatively strong base period,” said David Taylor, Chairman and CEO of P&G.
P&G tempered lagging sales with improving margins, reporting adjusted earnings of $1.09 a share compared with the $1.08 expected, according to Thomson Reuters analysts. P&G has been aggressively cutting costs, though some analysts have questioned whether it has done so at the expense of growth.
“Remain committed to productivity,” said Barclays analyst Lauren Lieberman after the results of the proxy fight came in, “but take care not to cut into anything that can be detrimental to near- and long-term top-line growth.”
P&G said that its results met expectations and the company is on track to deliver targets for the fiscal year.
“Looking forward, we will drive innovation, productivity and organization transformation to accelerate top-line growth while further expanding our industry-leading profit margins.”