Unilever N.V. (ADR) (UN): Three Takeaways From The Procter & Gamble Company (PG) Earnings

The Procter & Gamble Company (NYSE:PG) is going through some changes. The consumer goods giant announced earnings results this week, with the good news being that it met its (lowered) sales growth target. Unfortunately, the company also gave a weak forecast for the upcoming fiscal year.

P&G’s fiscal 2013 wasn’t bad. It saw annual earnings tick up by 5%, to $4.05, on a 1% rise in sales. Organic sales growth was 3%, smack in the middle of the 2% to 4% forecast that P&G provided late last year. But profitability fell as rising expenses offset the company’s cost cuts. Overall, the company’s turnaround appears to be plodding along.

Volume gains return
The Procter & Gamble Company (NYSE:PG) reported good volume growth in three of its four business segments last quarter. Health, baby, and home care all kicked in gains of at least 4%, while grooming was flat. That’s about even with Unilever N.V. (ADR) (NYSE:UN), which has been boosting sales volumes by 3% lately.

In fact, The Procter & Gamble Company (NYSE:PG) may be clawing back some of the market share it lost to its major rival. It held or grew share in most of its brands last quarter, with particularly strong performance in the U.S. For its part, Unilever N.V. (ADR) (NYSE:UN) called the North American market “sluggish.”

Shareholders get paid
Procter & Gamble returned tons of cash to shareholders this year. The company spent $12.5 billion — or 110% of its earnings — on dividends and share repurchases. That represents more than 5% of the company’s market cap in direct returns to investors.

And it expects that massive transfer pace to continue at least for the next year. P&G sees itself spending $6 billion on dividend payments over the next 12 months, and about $6 billion more on buying back shares.

Outlook is soft
However, 2014 will be another transition year for the company. The Procter & Gamble Company (NYSE:PG)’s annual outlook pegs growth at 3% to 4%, just keeping pace with the overall market. And earnings will come in below the company’s long-term growth targets — unless it hits the very top end of its guidance.