Personal Finance

P&G Will Take Up to $2.5 Billion in Charges for Restructuring, Gillette Impairment

Key Takeaways

  • Procter & Gamble Co. (P&G) will take up to $2.5 billion in charges for a restructuring along with an impairment related to its Gillette business.
  • The consumer products company said the restructuring would take place primarily in certain of its enterprise markets, including Argentina and Nigeria.
  • Procter & Gamble warned that while the Gillette unit’s business is strong, certain conditions could require a further impairment charge in the future.
  • P&G shares were down 3.5% from the day earlier in late Tuesday trading.

Procter & Gamble Co. (PG) shares fell 3.5% on Tuesday after the consumer products giant said it would be taking up to $2.5 billion in charges over the next two fiscal years related to a restructuring of some operations and impairment costs. 

The company said in a regulatory filing Tuesday that the restructuring would take place primarily in certain enterprise markets, including Argentina and Nigeria, “to address challenging macroeconomic and fiscal conditions.”

P&G said those costs would be in the range of $1.0 billion to $1.5 billion after tax, and would be recognized in the 2024 and 2025 fiscal years, with initial charges recognized in the current quarter.

The company added that also in this quarter it would record a $1.3 billion pretax ($1.0 billion after-tax) non-cash impairment charge on “intangible assets acquired as part of the Company’s 2005 acquisition of The Gillette Company.”

P&G explained that impairment charge was related to “a reduction in the estimated fair value of the Gillette indefinite-lived intangible asset due to a higher discount rate,” as well as weakening of several currencies relative to the U.S. dollar and the impact of the restructuring program.

The company warned in the regulatory filing that while the underlying performance of the Gillette business remains strong, “future adverse changes in the business or macroeconomic environment may trigger a further impairment charge.”

The news sent shares of Procter & Gamble further into negative territory for 2023.

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