Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Will Procter & Gamble (PG) Keep Growing in 2013? – Colgate-Palmolive Company (CL), Unilever N.V. (ADR) (UN)

Page 1 of 2

The Procter & Gamble Company (NYSE:PG) started off the year on a positive note and rose by 12.2%. The company didn’t have an easy year but after making many tough decisions in 2012, its outlook has improved. Will this leading consumer product company be able to keep growing in 2013? How is this company performing compared to other leading consumer product companies?

Little Growth, Stable Profitability

Based on the company’s recent financial reports, as of the fourth quarter, among the company’sfive segments, grooming had the highest profit margin at 24.4%. But this segment contracted by 4% in the recent quarter compared to Q4 2011. Moreover, the segment accounts for only 10% of the company’s net revenue, which puts grooming the smallest segment of the five. The sharpest gain was in Baby Care and Family Care segment with a 4% growth in revenue. This segment, however, has the lowest profitability of the five segments at 14.1%. If this trend will continue, this could lead to a drop in profitability in the coming months. The net profit margin of all five segments was 18.4% in the fourth quarter and the revenue growth was only 2% (year-over-year).

The Procter & Gamble Company (NYSE:PG)On a yearly scale, the company’s profit margin fell to 16% in 2012 compared to 19% in 2011. This figure is a bit misleading as there was an unusual expense of $2.6 billion, which includes a $1.5 billion provision for “Goodwill and indefinite lived intangible asset impairment charges.” After adjusting for this provision, the company’s operating profitability bounces back to 19%. In terms of profitability, The Procter & Gamble Company (NYSE:PG) is in the middle of the pack compared to other leading consumer goods companies: during 2012 the profitability of Unilever N.V. (ADR) (NYSE:UN) was around 14% and Colgate-Palmolive Company (NYSE:CL) had a profit margin of 23%.

In terms of revenues growth, The Procter & Gamble Company (NYSE:PG) is also in the middle of the pack with only a 3% growth in 2012 compared to 2011. Most of this growth was due to the company’s rise in prices of products by an average of 4%. The total volume of sales remained unchanged during the year. In my opinion, of the two, a rise in volume would have been better as it would have shown growth in demand for the company’s products. The silver lining is that despite the rise in prices, the volume sold wasn’tadversely affected by it.

Unilever N.V. (ADR) (NYSE:UN) recorded a growth rate of 10% in revenues, and Colgate-Palmolive Company (NYSE:CL)’s revenues grew by only 2%. Thus, P&G doesn’t lead other consumer product companies in terms of growth in revenues or profitability. Even though The Procter & Gamble Company (NYSE:PG) is in the middle of the pack on the above-mentioned criteria, the company still has made some changes that could put it as a company worth considering.


P&G has recently announced a bump in its dividend payment to reach $0.562 per share. This could put the company’s payout (the percentage of the dividend payment out of net earnings) higher than it was back in 2012 (assuming, of course, the company’s net earnings per sharewon’t rise). In 2012, the company’s payout was 69% compared to 51% in 2011. This means, in 2012, the company paid its investors 69% of its earnings per share. In comparison, Unilever N.V. (ADR) (NYSE:UN)’s payout was 63% in 2012 andColgate-Palmolive Company (NYSE:CL)’s was only 47%. Assuming The Procter & Gamble Company (NYSE:PG) will have the same earnings per share as it did in 2012, the company’s payout based on the current dividend payment will rise to 72%.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!