Procter & Gamble’s stock drops despite Q3 results beat

The Procter & Gamble Company (NYSE: PG) topped analysts’ expectations on revenue and earnings for the third quarter of 2019 but shares dipped 1.9% in morning hours on Tuesday.

Net sales rose 1% year-over-year to $16.5 billion. Organic sales grew 5%, driven by a 2% increase in organic shipment volume.

Net earnings attributable to Procter & Gamble improved 9% to $2.74 billion, or $1.04 per share, from the year-ago period. Core EPS rose 6% to $1.06, driven mainly by the increase in net sales and a lower effective tax rate. Currency-neutral core EPS grew 15%.

During the quarter, P&G delivered the highest sales growth of 9% in its Health Care segment, on a reported basis. The Beauty and Fabric & Home Care segments also registered sales growth of 4% and 2% respectively. The weakness in Grooming continued as sales declined 8%. The Baby, Feminine & Family Care segment saw a sales decrease of 2% versus last year.

Organic sales in the Beauty segment grew 9% year-over-year, helped by growth in Skin and Personal Care as well as Hair Care. Grooming segment organic sales dropped 1%. In the Health Care segment, organic sales rose 5%, driven by growth in Personal Health Care and Oral Care. Personal Health Care all-in sales increased double digits due to the addition of the Merck OTC           business.

In Fabric and Home Care, organic sales increased 7%, with mid-single digit growth in Fabric Care and high-single digit growth in Home Care. Baby, Feminine and Family Care segment organic sales grew 2% year-over-year.

For fiscal-year 2019, P&G expects total sales to be flat to up 1% versus 2018. The company raised its organic sales growth guidance to 4% from the previous range of 2-4%. GAAP EPS is expected to increase 17-24% versus last year while core EPS is expected to grow 3-8%.

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