P&G reported fiscal-second-quarter 2016 net sales of $16.9 billion, a decrease of 9% versus the prior year. The decline was primarily due to the impact of foreign exchange rates,a deconsolidation of the company’s Venezuelan operations and minor brand divestitures. Revenues were in line with consensus estimates. Organic sales (i.e., sales excluding foreign exchange and acquisitions and divestitures) increased by 2%. The company reported core EPS of $1.04 for the quarter, an increase of 9% versus the prior year, beating the $0.98 consensus estimate by six cents. Currency-neutral core EPS grew by 21% year over year.

SEGMENT RESULTS

Beauty: Organic sales grew by 1% year over year, as a positive 4% impact from pricing was partially offset by a 3% negative impact from lower organic volume. Organic sales increases in Personal Care and the super-premium SK-II skincare brand were partially offset by organic sales declines in the Olay brand. Grooming: Organic sales increased by 3% year over year, as higher pricing in shave care and growth at Braun from innovation more than offset lower volume. Organic sales increased globally in shave care and for Braun in developed markets. Health Care: Organic sales grew by 3% year over year, as a favorable geographic mix and higher pricing in both Oral Care and Personal Health Care were partially offset by lower volume. Organic sales growth was driven by Oral Care, particularly power toothbrushes, in developed markets and by Personal Health Care in developing markets. Fabric Care and Home Care: Organic sales increased by 2% year over year on pricing benefits and a favorable mix, with organic volume unchanged. Both FabricCare and HomeCare delivered strong growth in developed markets. This growth was partially offset by a decline in Fabric Care in developing markets. Baby, Feminine and Family Care: Organic sales were flat year over year, as pricing benefits were offset by lower organic volume. Baby Care organic sales declined, as the growth of Pampers in North America was more than offset by declines in other regions. Feminine Care organic sales increased due to growth in developed markets from innovation and in developing markets due to pricing. Family Care organic sales were unchanged, as increases in North America were offset by strategic distribution decreases in Mexico.

GUIDANCE

P&G maintained its guidance for fiscal 2016: in-line to low-single-digit organic sales growth and a high-single-digit decline for all-in sales(i.e., a decline of 7%–9%, to $69.4–$70.9 billion, above the consensus estimate of $66 billion). The company expects sales to be hurt by foreign exchange rates and a 2%–3% drag from the combined impact of the Venezuela deconsolidation and minor brand divestitures. P&G further maintained its guidance for fiscal 2016 core EPS to fall 3%–8% (to $3.46–$3.65) from the prior fiscal year’s core EPS of $3.76. The company now expects foreign exchange to have a negative 10%, or $0.37-per-share, impact on core EPS for the year, as compared to a 5%–6% currency headwind that was expected at the end of the first fiscal quarter.