2024-01-26 07:00:00 ET
Earlier this week, consumer staples giant Procter & Gamble (NYSE: PG) reported its second fiscal-quarter results. While global volumes declined 1%, revenue increased 4% as P&G has been impressively increasing prices, demonstrating the value of its higher-end household products. Perhaps more impressively, P&G's cost control and operating leverage allowed its currency-neutral core earnings per share (EPS) to rise by a much higher rate of 18%.
That is, of course, except for one item that affected generally accepted accounting principles ( GAAP) earnings That came in the form of a non-cash write-down of P&G's prized Gillette business. Of note, Gillette was previously an independent company and a core holding of Warren Buffett's Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) throughout the 1990s before P&G bought the company in 2005.
While it's nearly 20 years after the acquisition, since Warren Buffett likes to invest in premium brands with incredible staying power, it's a bit surprising to see the write-down. So, what's going on here?
For further details see:
Here's Why Procter & Gamble Just Wrote Down a Business It Bought From Warren Buffett