12.07.23
In a recent regulatory filing, Procter & Gamble (P&G) announced that it will incur up to $2.5 billion in charges over the next two fiscal years, primarily related to restructuring and impairment charges associated with its Gillette business.
The restructuring, targeted at certain enterprise markets facing "challenging macroeconomic and fiscal conditions," will cost $1.0 billion to $1.5 billion after tax, impacting P&G's 2024 and 2025 fiscal years. Additionally, the company will record a $1.3 billion non-cash impairment charge in the current quarter on intangible assets acquired through the 2005 Gillette acquisition.
P&G attributed the impairment charge to a higher discount rate, weakening currencies, and the effects of the restructuring program. While the company emphasized the underlying strength of Gillette's business, it warned that "future adverse changes" could trigger further impairments.
This latest development comes as Gillette continues to face stiff competition from lower-priced rivals like Dollar Shave Club, acquired by Unilever in 2016 and recently sold to Nexus Capital Management. These competitors have eroded Gillette's premium shave position, posing a significant challenge to the iconic brand's future trajectory.
Investors reacted negatively to the news, sending P&G shares down 3.5% in pre-market trading.
The restructuring, targeted at certain enterprise markets facing "challenging macroeconomic and fiscal conditions," will cost $1.0 billion to $1.5 billion after tax, impacting P&G's 2024 and 2025 fiscal years. Additionally, the company will record a $1.3 billion non-cash impairment charge in the current quarter on intangible assets acquired through the 2005 Gillette acquisition.
P&G attributed the impairment charge to a higher discount rate, weakening currencies, and the effects of the restructuring program. While the company emphasized the underlying strength of Gillette's business, it warned that "future adverse changes" could trigger further impairments.
This latest development comes as Gillette continues to face stiff competition from lower-priced rivals like Dollar Shave Club, acquired by Unilever in 2016 and recently sold to Nexus Capital Management. These competitors have eroded Gillette's premium shave position, posing a significant challenge to the iconic brand's future trajectory.
Investors reacted negatively to the news, sending P&G shares down 3.5% in pre-market trading.
