| The Procter and Gamble Company (NYSE: PG) reported second-quarter fiscal year 2025 net sales of $21.9 billion, an increase of two per cent versus the prior year. Organic sales, which exclude the impacts of foreign exchange and acquisitions and divestitures, increased by three per cent versus the prior year. Diluted net earnings per share were $1.88, an increase of 34% versus the prior year, due primarily to a non-cash impairment of the carrying value of the Gillette intangible asset in the base year. Core earnings per share were $1.88, an increase of two per cent versus the prior year. |
| Operating cash flow was $4.8 billion, and net earnings were $4.7 billion for the quarter. Adjusted free cash flow productivity was 84%. Adjusted free cash flow productivity is calculated as operating cash flow less capital spending, as a percentage of net earnings. The Company returned over $4.9 billion of cash to shareowners via $2.4 billion of dividend payments and $2.5 billion of share repurchases. |
| Second Quarter ($ billions, except EPS) |
| GAAP |
2025 |
2024 |
% Change |
|
Non-GAAP* |
2025 |
2024 |
% Change |
| Net Sales |
21.9 |
21.4 |
2% |
|
Organic Sales |
n/a |
n/a |
3% |
| Diluted EPS |
1.88 |
1.40 |
34% |
|
Core EPS |
1.88 |
1.84 |
2% |
| *Please refer to Exhibit 1 - Non-GAAP Measures for the definition and reconciliation of these measures to the related GAAP measures. |
|
| “The P&G team delivered an acceleration in organic sales growth, core EPS growth and strong cash return to shareowners in the second quarter,” said Jon Moeller, Chairman of the Board, President and Chief Executive Officer. “Our first-half results keep us on track to deliver within our guidance ranges on all key financial metrics for the fiscal year. We remain committed to our integrated growth strategy of a focused product portfolio of daily use categories where performance drives brand choice, and superiority — across product performance, packaging, brand communication, retail execution and consumer and customer value — productivity, constructive disruption and an agile and accountable organization. This strategy has enabled our solid results and is a foundation for balanced growth and value creation.” |
| October - December Quarter Discussion |
| Net sales in the second quarter of the fiscal year 2025 were $21.9 billion, a two per cent increase versus the prior year. Organic sales, which exclude the impacts of foreign exchange and acquisitions and divestitures, increased by three per cent. The organic sales increase was driven by a two per cent increase in organic volume (which excludes the impact of acquisitions and divestitures) and a per cent increase from the favourable geographic mix. Pricing had a neutral impact on sales growth for the quarter. |
| October - December 2024 |
Volume |
Foreign
Exchange |
Price |
Mix |
Other (2) |
Net Sales |
Organic
Volume |
Organic
Sales |
| Net Sales Drivers (1) |
| Beauty |
(1)% |
(1)% |
2% |
—% |
—% |
—% |
—% |
2% |
| Grooming |
2% |
(1)% |
1% |
(1)% |
—% |
1% |
2% |
2% |
| Health Care |
—% |
—% |
1% |
2% |
(1)% |
2% |
—% |
3% |
| Fabric & Home Care |
1% |
—% |
—% |
1% |
—% |
2% |
2% |
3% |
| Baby, Feminine & Family Care |
4% |
—% |
(1)% |
—% |
—% |
3% |
4% |
4% |
| Total P&G |
1% |
—% |
—% |
1% |
—% |
2% |
2% |
3% |
| (1) Net sales percentage changes are approximations based on quantitative formulas that are consistently applied. |
| (2) Other includes the sales mix impact from acquisitions and divestitures and rounding impacts necessary to reconcile volume to net sales. |
- Beauty segment organic sales increased two per cent versus a year ago. Hair Care organic sales increased by low single digits driven by volume growth in North America, Europe and Latin America and favourable geographic and premium product mix, partially offset by volume declines primarily in Greater China. Personal Care organic sales increased by double digits driven by innovation-based volume growth. Skin Care organic sales declined mid-single digits due to volume declines, partially offset by a favourable product mix from higher sales of the super-premium SK-II brand.
|
- Grooming segment organic sales increased two per cent versus a year ago behind innovation-driven volume growth partially offset by an unfavorable geographic mix.
|
- Health Care segment organic sales increased by three per cent versus a year ago. Oral Care organic sales increased by low single digits driven by product mix from premium innovation. Personal Health Care organic sales increased by low single digits due to volume growth and pricing, partially offset by an unfavourable product mix.
|
- Fabric and Home Care segment organic sales increased by three per cent versus a year ago. Fabric Care organic sales increased by low single digits driven by volume growth and a favorable geographic mix from growth in North America. Home Care organic sales increased by mid-single digits due to volume growth and a favourable product mix.
|
- Baby, Feminine and Family Care segment organic sales increased by four per cent versus a year ago. Baby Care organic sales decreased by low single digits due to volume declines and merchandising investments, partially offset by favourable geographic and product mix. Feminine Care organic sales increased by low single digits driven by a favorable geographic mix, partially offset by volume declines in international markets. Family Care organic sales increased by double digits driven by strong volume growth.
|
| Diluted net earnings per share increased by 34% to $1.88, compared to a base period that includes the Gillette intangible asset impairment charge. Core earnings per share increased two per cent to $1.88. Currency-neutral core EPS were up 3% versus the prior year's core EPS. |
| Reported and core gross margin for the quarter decreased 30 basis points versus the prior year and decreased 20 basis points on a currency-neutral basis. Gross productivity savings of 150 basis points and benefits from increased pricing of 30 basis points were fully offset by 110 basis points of the unfavourable mix, 50 basis points of unfavourable commodity costs, 40 basis points of product reinvestments and transportation services costs. |
| Reported selling, general and administrative expenses (SG&A) as a percentage of sales increased 40 basis points versus a year ago. Core selling, general and administrative expense (SG&A) as a percentage of sales increased 50 basis points versus a year ago and increased 30 basis points on a currency-neutral basis. The increase was driven by 210 basis points of reinvestments, partially offset by 110 basis points of productivity savings, 60 basis points of net sales growth leverage and 10 basis points of other savings. |
| The reported operating margin for the quarter increased by 550 basis points versus the prior year. The core operating margin for the quarter decreased by 80 basis points versus the prior year and decreased by 50 basis points on a currency-neutral basis. The core operating margin included gross productivity savings of 260 basis points. |
| Fiscal Year 2025 Guidance |
| P&G maintained its guidance range for fiscal 2025 all-in sales growth to be in the range of two to four per cent versus the prior year. The combined headwinds from foreign exchange and divestitures are expected to negatively impact all-in sales growth by approximately one percentage point. The Company also maintained its outlook for organic sales growth in the range of three to five per cent. |
| P&G maintained its fiscal 2025 diluted net earnings per share growth to be in the range of 10% to 12% versus fiscal 2024 diluted net EPS of $6.02. P&G also maintained its fiscal 2025 core earnings per share growth to be in the range of five to seven per cent versus fiscal 2024 core EPS of $6.59. This outlook equates to a range of $6.91 to $7.05 per share, with a mid-point estimate of $6.98, or an increase of 6%. |
| P&G continues to expect a commodity cost headwind of approximately $200 million after tax for fiscal 2025. The Company now expects unfavourable foreign exchange rates will be a headwind of approximately $300 million after tax. Collectively these impacts are a headwind of $0.20 per share. |
| In addition, the prior fiscal year included benefits from minor brand divestitures and favourable tax impacts that are unlikely to repeat to the same extent in the fiscal year 2025. Combined, these are an additional $0.10 to $0.12 headwind to core EPS. |
| The Company is unable to reconcile its forward-looking non-GAAP cash flow and tax rate measures without unreasonable efforts given the unpredictability of the timing and amounts of discrete items, such as acquisitions, divestitures, or impairments, which could significantly impact GAAP results. |
| P&G continues to expect a core effective tax rate to be in the range of 20% to 21% in fiscal 2025. |
| Capital spending is estimated to be in the range of four to five per cent of fiscal 2025 net sales. |
| P&G continues to expect adjusted free cash flow productivity of 90% and expects to pay around $10 billion in dividends and to repurchase $6 to $7 billion of common shares in fiscal 2025. |
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| Procter and Gamble |
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