Procter & Gamble (NYSE:PG) is going through some changes. The consumer goods giant announced earnings results this week, with the good news being that it met its (lowered) sales growth target. Unfortunately, the company also gave a weak forecast for the upcoming fiscal year.
P&G's fiscal 2013 wasn't bad. It saw annual earnings tick up by 5%, to $4.05, on a 1% rise in sales. Organic sales growth was 3%, smack in the middle of the 2% to 4% forecast that P&G provided late last year. But profitability fell as rising expenses offset the company's cost cuts. Overall, the company's turnaround appears to be plodding along.
Volume gains return
P&G reported good volume growth in three of its four business segments last quarter. Health, baby, and home care all kicked in gains of at least 4%, while grooming was flat. That's about even with Unilever, which has been boosting sales volumes by 3% lately.
In fact, P&G may be clawing back some of the market share it lost to its major rival. It held or grew share in most of its brands last quarter, with particularly strong performance in the U.S. For its part, Unilever called the North American market "sluggish."
Shareholders get paid
Procter & Gamble returned tons of cash to shareholders this year. The company spent $12.5 billion -- or 110% of its earnings -- on dividends and share repurchases. That represents more than 5% of the company's market cap in direct returns to investors.
And it expects that massive transfer pace to continue at least for the next year. P&G sees itself spending $6 billion on dividend payments over the next 12 months, and about $6 billion more on buying back shares.
Outlook is soft
However, 2014 will be another transition year for the company. P&G's annual outlook pegs growth at 3% to 4%, just keeping pace with the overall market. And earnings will come in below the company's long-term growth targets -- unless it hits the very top end of its guidance.
New CEO A.G Lafley was frank with investors about the challenges that P&G faces. In the conference call with analysts, he said, "we know we're not winning, like we know we can, and we are committed to make the changes we know we need to make to improve P&G's performance significantly." Until those big performance gains kick in, analysts expect P&G to earn $4.32 per share next year, or just 7% better than this year's haul.
Fool contributor Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool recommends Procter & Gamble and Unilever. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.