P&G(US:PG)2026-01-23 02:51Financial Performance - For the six months ended December 31, 2025, the company reported net sales growth of 21% compared to the same period in 2024, with net earnings increasing by 18%[86]. - Net sales for the quarter increased 1% to $22.2 billion, driven by a 1% increase from higher pricing and favorable foreign exchange, while unit volume declined by 1%[94]. - Net earnings for the quarter were $4.3 billion, a decrease of $328 million, or 7%, primarily due to a decrease in operating income[101]. - Diluted EPS decreased 5% to $1.78 compared to the prior year period[101]. - Operating income decreased 7% to $5.4 billion, with an operating margin of 24.2%, down 200 basis points from the prior year[98]. - Gross margin decreased 120 basis points to 51.2% of net sales for the quarter, impacted by unfavorable product mix and higher restructuring costs[97]. - For the six months ended December 31, 2025, net sales increased 2% to $44.6 billion, with organic sales up 1%[105]. - Net earnings attributable to Procter & Gamble for the six months were $9.1 billion, an increase of $466 million, or 5%[104]. - Total company net sales for the three months ended December 31, 2025, were $22.2 billion, reflecting a 1% increase compared to the prior year[113]. - Net earnings increased by $466 million, or 5%, to $9.1 billion, with diluted EPS rising 7% to $3.73[112]. Segment Performance - The Beauty segment accounted for 19% of net sales and 18% of net earnings for the six months ended December 31, 2025[81]. - Beauty segment net sales increased 5% to $4.0 billion, driven by a 3% increase in unit volume and a 2% positive pricing impact[116]. - Grooming segment net sales increased 2% to $1.8 billion, with a 2% positive impact from pricing and foreign exchange, but a 2% decline in unit volume[122]. - Health Care segment net sales increased 5% to $3.4 billion, supported by a 2% favorable product mix and a 2% positive foreign exchange impact[126]. - Net earnings margin for the Beauty segment decreased by 140 basis points, resulting in a net earnings decrease of 2% to $763 million[117]. - Grooming segment net earnings decreased 9% to $417 million, attributed to a 290 basis-point decline in net earnings margin[123]. - Health Care segment net earnings increased 2% to $770 million, despite a 70 basis-point decrease in net earnings margin[128]. - Fabric & Home Care net sales increased 1% to $7.7 billion, driven by favorable foreign exchange and higher pricing, partially offset by an unfavorable product mix[131]. - Baby, Feminine & Family Care net sales decreased 3% to $5.1 billion, primarily due to a unit volume decline of 5%[137]. Restructuring and Costs - The company expects to incur approximately $1.5 to $2.0 billion in before-tax restructuring costs over a two-year period as part of its focused portfolio and productivity plan[83]. - The company completed a limited market portfolio restructuring, resulting in incremental restructuring charges of approximately $1.2 billion after tax from December 31, 2023, to September 30, 2024[82]. - The company plans to reduce up to 7,000 non-manufacturing overhead personnel by the end of fiscal 2027 as part of its restructuring activities[83]. - The company has ongoing restructuring activities with costs historically around $250 million to $500 million before tax[155]. Cash Flow and Liquidity - Adjusted free cash flow was $8.7 billion, with adjusted free cash flow productivity at 95% of net earnings[1]. - Operating cash flow was $10.4 billion, an increase of $1.3 billion compared to the prior year, with net earnings adjusted for non-cash items generating $11.1 billion[146]. - Investing activities used $2.8 billion of cash, primarily driven by capital expenditures[147]. - Financing activities used $6.3 billion of net cash, mainly due to dividends and treasury stock purchases[148]. - As of December 31, 2025, current liabilities exceeded current assets by $10.1 billion, with expectations to support short-term liquidity through cash generated from operations[149]. Market Exposure and Risks - The company generated over 50% of its sales outside the United States, with significant exposure to global macroeconomic factors and geopolitical tensions[86]. - The company reported that its Russia business accounted for 1% of consolidated net sales, net earnings, and net assets as of June 30, 2025[86]. - The company is exposed to foreign exchange fluctuations, which have negatively impacted net sales, net earnings, and cash flows due to the weakening of certain foreign currencies against the U.S. dollar[87]. - Global market share of the Beauty segment decreased by 0.4 points, while the Health Care segment's market share increased by 0.3 points[118][129].