Procter & Gamble Co. is planning a restructuring of its business operations, primarily in certain enterprise markets, including Argentina and Nigeria. This decision has been made to address the challenging macroeconomic and fiscal conditions in these regions.
The consumer goods company anticipates after-tax restructuring charges of $1.0 billion to $1.5 billion, with most of them being noncash charges. These charges will be recognized in the fiscal years ending June 30, 2024, and 2026, with the first charges expected to be booked in the quarter ending Dec. 31.
Additionally, Procter & Gamble expects to record a roughly $1.3 billion pretax noncash impairment charge related to its 2005 acquisition of The Gillette Co. The impairment charge is a result of various factors including a higher discount rate, weakening of several currencies relative to the U.S. dollar, and the impact of the restructuring program mentioned above. It’s important to note that despite this impairment charge, the underlying Gillette business remains strong.
While Procter & Gamble’s stock has gained 0.3% so far this year, the S&P 500 has experienced a 19% increase during the same period.
Conclusion
Procter & Gamble’s decision to restructure its business operations reflects its commitment to addressing the challenging economic conditions in certain markets. With anticipated restructuring charges and an impairment charge related to The Gillette Co. acquisition, the company aims to navigate these difficulties and ensure the resilience of its business moving forward.
