"Global Leading Consumer Goods Stock P&G, Shareholder Returns Expected to Increase"

Korea Investment & Securities Report

[Asia Economy Reporter Myunghwan Lee] Procter & Gamble (P&G), a leading American retail company, reported third-quarter results that exceeded expectations, prompting securities firms to forecast an increase in the company's shareholder return appeal.

On the 20th, Korea Investment & Securities analyzed, "P&G is a company that has increased its dividends for 66 consecutive years and has maintained strong shareholder return appeal even during the U.S. financial crisis, the spread of COVID-19, and periods of interest rate hikes."

P&G's net sales from July to September rose 1.3% year-on-year to $20.61 billion (approximately KRW 27.68 trillion). Adjusted earnings per share (EPS) were $1.57, down 2.5% from the same period last year. Both net sales and EPS surpassed market expectations of $20.34 billion and $1.55, respectively.

Korea Investment & Securities attributed the strong performance to a 9.0% price increase compared to the previous year, while total sales volume only declined by 3.0%. However, excluding currency effects and one-time factors, sales increased by 7.0%. Since P&G generates over 50% of its sales overseas, the firm noted that the rise in the dollar's value led to a downward revision of sales guidance.

Korea Investment & Securities diagnosed that P&G's shareholder return appeal will be highlighted once again. The company's annual net sales guidance for fiscal year 2023 is projected to decline by 1-3% compared to the previous year, a downward revision from the 0-2% growth forecast announced in the previous quarter. However, excluding currency and one-time factors, sales are expected to grow by 3-5%. Accordingly, the annual dividend payout is projected at $9 billion, and share repurchases are expected to range between $6 billion and $8 billion. Excluding one-time factors, additional sales growth is anticipated in 2023, and with stabilization of government bond yields, dividend appeal is expected to be reemphasized, according to Korea Investment & Securities.

There is also an assessment that the resolution of this year's negative factors could lead to a stock price increase. Korea Investment & Securities explained that the strong dollar limited sales growth, and steep inflation led to increased costs. For 2023, they expect sales growth and profitability improvement due to a slowdown in U.S. monetary tightening and easing inflationary pressures. They also forecast that as China relaxes its zero-COVID policy, sales of Asian beauty products based on premium products will increase.

Researcher Bowon Choi of Korea Investment & Securities advised, "In 2023, the company is presented as highly attractive for investment due to expected performance improvements following the easing of macroeconomic uncertainties."

This content was produced with the assistance of AI translation services.