P&G Takes $8 Billion Writedown on Gillette

Procter & Gamble is taking a one-time, $8 billion writedown related to the Gillette business, the company said Tuesday.
Chief financial officer Jon Moeller said the Gillette business has faced significant currency impacts which, combined with lower shave frequency, caused P&G to take a one-time, non-cash accounting writedown. He also acknowledged new competitors in the shaving space, though he claimed they had "much less of an impact" on the Gillette business than currency and shaving trends.
Moeller noted that Gillette's Skin Guard launch, which is meant to help men shave with less skin irritation, is off to a strong start.
"That's been one of the reasons men are shaving less frequently is because it's irritating to their skin," Moeller said Tuesday morning. P&G is hoping Skin Guard can bring men back into the shave category, he noted.
"This is still an incredibly valuable asset," he added of the brand, which P&G acquired in 2005 for $57 billion.
Moeller hopped on a call with journalists Tuesday morning after P&G released its financial results for the fourth fiscal quarter and fiscal year.
Fourth-quarter net sales were $17.1 billion, up 4 percent from the prior-year period, with a diluted net loss per share of $2.12, due to the Gillette charge. Grooming net sales were down 3 percent in the quarter, to $1.6 billion. Beauty sales were up 3 percent, to nearly $3.2 billion.
For the fiscal year, P&G's net sales were $67.7 billion, up 1 percent year-over-year. Diluted net earnings per share were $1.43, down 61 percent from the prior year, due to the charge on Gillette. Net grooming sales were down 5 percent for the fiscal year, to $6.2 billion, while beauty sales were up 4 percent, to $12.9 billion.
In beauty, sales continue to be driven by SK-II and Olay, which are both growing, the company said. Hair care also grew organic sales in the low-single digits, P&G said.
Source: Read Full Article