The Procter & Gamble Company (NYSE:PG)
Barclays Back-to-School Consumer Conference
September 08 2016, 08:15 AM ET
Jon Moeller – CFO
Lauren Rae Lieberman – Barclays Capital, Inc.
P&G would like to remind you that today’s presentation includes a number of forward-looking statements. If you will refer to P&G’s most recent 10-K, 10-Q, and 8-K reports, you will see a discussion of factors that could cause the Company’s actual results to differ materially from these projections.
Also as required by Regulation G, Procter & Gamble needs to make you aware that during the presentation, the Company will make a number of references to non-GAAP and other financial measures. For completeness, Procter & Gamble has posted on its website www.pg.com, a copy of the key slides from this presentation and a full reconciliation of non-GAAP and other financial measures.
Lauren Rae Lieberman
So with one word to mark [ph] to start the P&G’s transformation as the CAGNY 2012 cost savings program announcement. We’ll be four and a half years since the turnaround, if sales and earnings trends have only slowed since then. So within this context, we think the biggest question remains how and when P&G can transition to a time a period of sustained, organic sales growth inline or better than its peers. While it’s positive in our mind that nearly $1 billion step up in advertising this year should reach well beyond advertising we’ve [ph] been spending this year. We do think seeing a return on these investments will take time.
Here to discuss some of the changes underway and efforts to accelerate growth, we are fortunate to have CFO, Jon Moeller with us again this year at the conference.
Thanks, Lauren and good morning everybody. I’m going to just briefly cover recent results and our outlook for 2017. I’ll talk about our efforts to re-accelerate top line growth. I’ll update you on productivity and portfolio progress and discuss how we are strengthening our organisation and culture to sustainably win.
Fiscal 2016 organic sales growth for the company improved sequentially through the year. Organic sales for the June quarter were up 2%. This includes about a one point drag from the combination of the cleanup work we are doing with the ongoing portfolio and the impact of Venezuela. Excluding these two impacts of 2% would be 3%, progress but with more work to do.
Fourth quarter growth was volume driven. Organic volume grew 2% with progress in every segment. Organic sales also grew in every segment. Market value share trends improved in every segment for the six month period versus the 12-month period and the same is true in the three month period versus the six month period.
Back up sales momentum was in line with the front half or ahead in nine of ten categories, again progress with more work to do.
Turning to the bottom line, constant currency core earnings per share were up 7% last fiscal year. Including foreign exchange, core earnings per share were down 2%. Core gross margin and operating margin improved by triple digit indices including and excluding currency.
We generated $12.1 billion in free cash flow with 115% free cash flow productivity. We paid $7.4 billion in dividends and reduced outstanding shares at a value of over $8 billion through a combination of share repurchase and the Duracell share exchange.
In total, nearly $16 billion in dividend payments share exchange and share repurchase. This year, we are out looking further progress on the top and bottom lines. We don’t expect straight line improvements, some quarters will be better than others, but we should continue over the course of the fiscal year to make progress.
We expect another strong year of cash productivity and over $22 billion return to share owners through dividends, share exchange and share repurchase. We continue to outlook up to $70 billion in dividends, share repurchase and share exchange over the four year period through fiscal 2019.
Fuente: Seeking Alpha
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