P&G(PG) - 2025 Q2 - Quarterly Report

Segment Performance - Net sales for the Beauty segment accounted for 18% of total company net sales for both the three and six months ended December 31, 2024[81] - The Fabric & Home Care segment contributed 35% of total company net sales for both the three and six months ended December 31, 2024[81] - The Baby, Feminine & Family Care segment represented 24% of total company net sales for the three months ended December 31, 2024, and 23% for the six months ended December 31, 2024[81] - Beauty segment net sales remained unchanged at $3.8 billion, with a 10% decrease in net earnings to$ 780 million[113][114] - Grooming segment net sales increased by 1% to $1.8 billion, with net earnings up 4% to$ 459 million[119][120] - Health Care segment net sales grew by 2% to $3.2 billion, with net earnings increasing 5% to$ 758 million[123][124] - Fabric & Home Care segment net sales rose by 2% to $7.6 billion, but net earnings decreased by 1% to$ 1.6 billion[112] - Baby, Feminine & Family Care segment net sales increased by 3% to $5.3 billion, with net earnings up 2% to$ 1.1 billion[112] - Hair Care net sales decreased mid-single digits, with a 0.7-point decline in global market share[116] - Personal Care net sales increased double digits, with a 0.8-point increase in global market share[116] - Skin Care net sales decreased low single digits, with a 0.7-point decline in global market share[116] - Fabric & Home Care net sales increased 2% to $7.6 billion, driven by a 1% unit volume increase and 1% favorable mix[128] - Organic sales for Fabric & Home Care increased 3%, with organic volume up 2% and global market share rising 0.1 points[128] - Oral Care net sales increased low single digits, driven by premium product mix growth, with organic sales up low single digits and global market share increasing 0.2 points[131] - Personal Health Care net sales increased low single digits, with organic sales up low single digits, though global market share decreased 0.1 points[131] - Baby, Feminine & Family Care net sales increased 3% to$ 5.3 billion, driven by a 4% unit volume increase, with organic sales up 4%[134] - Family Care net sales increased double digits, driven by unit volume growth, with organic sales also up double digits and North America market share increasing 0.3 points[137] Financial Performance - Net sales increased 1% to $43.6 billion, with organic sales up 2%[89] - Net earnings rose 7% to$ 8.6 billion, driven by a $1.3 billion non-cash impairment charge in the prior year[89] - Diluted EPS increased 8% to$ 3.49, while Core EPS rose 4% to $3.81[89] - Operating cash flow was$ 9.1 billion, with adjusted free cash flow at $7.8 billion and productivity at 83%[89] - Net sales for the quarter increased 2% to$ 21.9 billion, with organic sales up 3%[94] - Operating income surged 30% to $5.7 billion, with operating margin up 550 basis points to 26.2%[97] - Net earnings for the quarter increased 33% to$ 4.7 billion, with diluted EPS up 34% to $1.88[100] - Gross margin decreased 30 basis points to 52.4% due to unfavorable product mix and higher commodity costs[95] - SG&A spending increased 4% to$ 5.7 billion, with SG&A as a percentage of net sales up 40 basis points to 26.2%[96] - The effective income tax rate decreased to 20.3% from 22.3% due to favorable geographic mix and higher excess tax benefits[99] - Net earnings increased by $597 million (7%) to$ 8.6 billion, with a positive foreign exchange impact of $17 million[111] - Total company net sales for the six months ended December 31, 2024, increased by 1% to$ 43.6 billion, with net earnings up 7% to $8.6 billion[112] - Corporate net earnings increased$ 1.2 billion to a loss of $24 million, primarily due to a$ 1.3 billion non-cash impairment charge on the Gillette intangible asset[141] - Operating cash flow decreased by $877 million to$ 9.1 billion, with working capital and other impacts using $2.2 billion of cash[143] - Adjusted free cash flow for the six months ended December 31, 2024, was$ 7,771 million, with operating cash flow of $9,127 million and capital spending of$ 1,918 million[151] - Adjusted free cash flow productivity for the six months ended December 31, 2024, was 83%, with net earnings adjusted to $9,398 million[152] - Core EPS for the three months ended December 31, 2024, was$ 1.84, compared to $1.40 in the same period of 2023[156] - Core net earnings attributable to P&G increased by 2% for the three months ended December 31, 2024, compared to the prior year[157] - Core net earnings attributable to P&G increased by 4% for the six months ended December 31, 2024, compared to the prior year[160] - Core EPS for the six months ended December 31, 2024, was$ 3.81, compared to $3.66 in the same period of 2023[162] Restructuring and Impairment Charges - The company completed a limited market portfolio restructuring in Argentina, incurring incremental restructuring charges of approximately$ 0.8 billion after tax[82] - Total incremental restructuring charges from December 31, 2023, to September 30, 2024, were approximately $1.2 billion after tax[82] - The Company recognized a non-cash, after-tax impairment charge of$ 1.0 billion related to the Gillette intangible asset[158] Geographic Performance - Greater China, the United Kingdom, Canada, Japan, and Germany collectively comprised approximately 20% of the company's net sales in fiscal 2024[85] - The company's Russia business accounted for less than 2% of consolidated net sales and net earnings in the fiscal year ended June 30, 2024[85] Market Risks and Challenges - The company is exposed to significant foreign exchange impacts due to the weakening of certain foreign currencies versus the U.S. dollar, which negatively affects net sales, net earnings, and cash flows[86] - The company has significant exposure to fluctuations in commodity and input material prices, particularly oil-derived materials like resins and paper-based materials like pulp[87] - The company faces risks from changes in U.S. and foreign government legislative, regulatory, or enforcement policies that can negatively impact net sales, net earnings, and cash flows[88] Organic Sales and Market Share - Organic sales growth for the Total Company was 3% for the three months ended December 31, 2024, with Baby, Feminine & Family Care leading at 4%[150] - Net earnings for Baby, Feminine & Family Care increased 2% to $1.1 billion, despite a 30 basis-point decline in net earnings margin[135]