P&G(PG) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Organic sales for fiscal year 2025 grew by 2%, with volume growth contributing 1% and price mix adding another 1% [8][12] - Core earnings per share (EPS) reached $6.83, up 4% year-over-year [12][17] - Core gross margin declined by 40 basis points, while core operating margin increased by 50 basis points [12][18] - Adjusted free cash flow productivity was 87% for the year [13] Business Line Data and Key Metrics Changes - Nine out of ten product categories experienced organic sales growth, with Family Care and Personal Healthcare growing in the low single digits [9][10] - Baby Care saw a decline in organic sales in the low single digits [10] - E-commerce sales increased by 12%, now representing 19% of total company sales [10] Market Data and Key Metrics Changes - Focus markets grew organic sales by 2%, with North America and Europe focus markets up by 2% and 3% respectively [10] - Greater China organic sales were down 5% year-over-year but improved sequentially, growing 2% in the most recent quarter [10][15] - Enterprise markets grew by 2%, led by Latin America with 4% organic sales growth [10] Company Strategy and Development Direction - The company is focused on balanced top and bottom line growth, emphasizing the need for brands to lead market growth rather than just gaining market share [4][22] - A restructuring program was announced to strengthen execution of the integrated strategy, focusing on portfolio management, supply chain efficiency, and organizational design [20][35] - The company aims to create $10 billion to $15 billion in sales opportunities in enterprise markets by increasing per capita consumption [21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging operating environment, including consumer anxiety due to tariffs, inflation, and geopolitical issues [20][42] - The company expects the market environment to remain volatile and challenging in fiscal year 2026, with guidance for organic sales growth in the range of flat to 4% [42][43] - Management emphasized the importance of creating internal tailwinds to drive growth despite external challenges [56] Other Important Information - The company plans to return approximately $15 billion to shareholders in fiscal year 2026 through dividends and share repurchases [47] - The transition of leadership to Shailesh Jujurukar as the new CEO is planned for January 1, 2026, with John Moeller moving to Executive Chairman [3][49] Q&A Session Summary Question: Insights on Shailesh's attributes and goals for the transition - Management highlighted Shailesh's extensive experience and successful leadership in key business areas as reasons for his selection as the next CEO [54][55] Question: Tailwind creation efforts for fiscal year 2026 - Management discussed the restructuring program as a means to build financial headroom for innovation and commercialization, aiming to create internal growth drivers [56][57] Question: Addressing the narrowing performance gap in North America - Management acknowledged the reduction in category growth rates and the need to regain superiority in certain categories to enhance growth [63][65] Question: Timing of the CEO change and organizational capabilities - The timing of the leadership transition was deemed appropriate given the company's strong performance and strategic positioning [78][79] - Management emphasized the importance of breaking down silos within the organization to enhance decision-making and efficiency [81][82]