Procter & Gamble to Book Up to $2.5 Billion in Charges for Restructuring, Gillette Impairment

By Robb M. Stewart

Procter & Gamble flagged up to $2.5 billion in restructuring charges for its international operations and an impairment hit for assets it had picked up with the 2005 acquisition of Gillette.

The consumer-products company in a regulatory filing Tuesday said it expects to record charges of between $1 billion and $1.5 billion after tax for the a limited portfolio restructuring, mainly of certain operations in its enterprise markets arm, including Argentina and Nigeria.

The charges include foreign currency translation losses it expected to recognize on the liquidation of operations in the affected markets. It said it estimates the large majority of the charges will be considered noncash.

P&G forecast the charges will be recognized in the fiscal years ending mid-2024 and mid-2025, with initial charges recognized in final three months of this year, though the timing of the completion of this restructuring program has yet to be determined.

As well, the company said that as part of its restructuring efforts it will book an about $1.3 billion impairment charge in the three months to Dec. 31 on intangible assets bought with the deal for Gillette.

The charge relates to a reduction in the estimated fair value of the Gillette indefinite-lived intangible asset due to a higher discount rate, weakening of several currencies relative to the U.S. dollar and the impact of the restructuring program, P&G said. The impairment adjusts the carrying value of the Gillette intangible asset to fair value.

P&G said the underlying performance of the Gillette business remains strong, but future adverse changes in the business or macroeconomic environment could trigger a further impairment charge.

Together, P&G said it expects total charges of about $2 billion to $2.5 billion after tax over the periods, which will be reported as non-core charges.

Write to Robb M. Stewart at [e-mail]

(END) Dow Jones Newswires

December 05, 2023 09:50 ET (14:50 GMT)

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