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The below provides additional details on amounts reclassified from AOCI into the Consolidated Statement of Earnings:
•Postretirement benefit plan amounts are reclassified from AOCI into Other non-operating income/(expense), net and included in the computation of net periodic postretirement costs.
•Foreign currency translation amounts are reclassified from AOCI into Other non-operating income/(expense), net. These amounts relate to accumulated foreign currency translation losses recognized due to the substantial liquidation of operations in Argentina recorded in the period ended September 30, 2024.
9.
Amounts in millions of dollars except per share amounts or as otherwise specified.
12 The Procter & Gamble Company
Additional information on the Commitments and Contingencies of the Company can be found in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024.
10.
to days. All outstanding amounts related to suppliers participating in SCF are recorded within Accounts payable in our Consolidated Balance Sheets, and the associated payments are included in operating activities within our Consolidated Statements of Cash Flows. The amount due to suppliers participating in SCF and included in Accounts payable was approximately $ billion as of March 31, 2025 and June 30, 2024.11.
to $ annually. Consistent with our historical policies for restructuring-type activities, the restructuring program charges will be funded by and included within Corporate for management and segment reporting.In the fiscal year ended June 30, 2024, the Company started a limited market portfolio restructuring of its business operations, primarily in certain Enterprise Markets, including Argentina and Nigeria, to address challenging macroeconomic and fiscal conditions. During the period ended September 30, 2024, the Company completed this limited market portfolio restructuring with the substantial liquidation of its operations in Argentina and recorded approximately $ billion after tax of incremental charges, comprised primarily of non-cash charges for accumulated foreign currency translation losses previously included in Accumulated other comprehensive income/(loss). The total incremental restructuring charges incurred under the program beginning in the three-month period ended December 31, 2023, through the three-month period ended September 30, 2024, were approximately $ billion after tax.
For the three months ended March 31, 2025, the Company incurred total before tax charges of $ including $ in Costs of products sold, $ in SG&A and $ in Other non-operating income/(expense). For the nine months ended March 31, 2025, the Company incurred charges of $ including $ in Costs of products sold, $ in SG&A and $ in Other non-operating income/(expense).
Amounts in millions of dollars except per share amounts or as otherwise specified.
The Procter & Gamble Company 13
| | $ | | | | $ | | | | $ | | |
| Costs incurred for the six months ended December 31, 2024 | | | | | | | | | | | |
| Costs incurred for the three months ended March 31, 2025 | | | | | | | | | | | |
| Costs incurred for the nine months ended March 31, 2025 | | | | | | | | | | | |
| | | | | | | |
| Costs paid/settled for the nine months ended March 31, 2025 | () | | | () | | | () | | | () | |
| RESERVE MARCH 31, 2025 | $ | | | | $ | | | | $ | | | | $ | | |
Separation Costs
Employee separation costs relate to severance packages that are primarily voluntary and the amounts calculated are based on salary levels and past service periods.
Asset-Related Costs
Asset-related costs consist of both asset write-downs and accelerated depreciation for manufacturing consolidations. Asset write-downs relate to the establishment of a new fair value basis for assets held-for-sale or for disposal. These assets are written down to the lower of their current carrying basis or amounts expected to be realized upon disposal, less minor disposal costs. Charges for accelerated depreciation relate to long-lived assets that will be taken out of service prior to the end of their normal service period.
Other Costs
Other restructuring-type charges are incurred as a direct result of the restructuring plan. Such charges include accumulated foreign currency translation losses, asset removal and termination of contracts.
| | | | | |
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
Forward-Looking Statements
Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may appear throughout this report, including without limitation, the following sections: “Management's Discussion and Analysis,” “Risk Factors” and "Notes 4 and 9 to the Consolidated Financial Statements." These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result” and similar expressions. Forward-looking statements are based on current expectations and assumptions, which are subject to risks and uncertainties that may cause results to differ materially from those expressed or implied in the forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or otherwise, except to the extent required by law.
Risks and uncertainties to which our forward-looking statements are subject include, without limitation: (1) the ability to successfully manage global financial risks, including foreign currency fluctuations, currency exchange, pricing controls or tariffs; (2) the ability to successfully manage local, regional or global economic volatility, including reduced market growth rates, and to generate sufficient income and cash flow to allow the Company to effect the expected share repurchases and dividend payments; (3) the ability to successfully manage uncertainties related to changing political and geopolitical conditions and potential implications such as exchange rate fluctuations, market contraction, boycotts, sanctions, tariffs or other trade controls; (4) the ability to manage disruptions in credit markets or to our banking partners or changes to our credit rating; (5) the ability to maintain key manufacturing and supply arrangements (including execution of supply chain optimizations and sole supplier and sole manufacturing plant arrangements) and to manage disruption of business due to various factors, including ones outside of our control, such as natural disasters, acts of war or terrorism or disease outbreaks; (6) the ability to successfully manage cost fluctuations and pressures, including prices of commodities and raw materials and costs of labor, transportation, energy, pension and healthcare; (7) the ability to compete with our local and global competitors in new and existing sales channels, including by successfully responding to competitive factors such as prices, promotional incentives and trade terms for products; (8) the ability to manage and maintain key customer relationships; (9) the ability to protect our reputation and brand equity by successfully managing real or perceived issues, including concerns about safety, quality, ingredients, efficacy, packaging content, supply chain practices or similar matters that may arise; (10) the ability to successfully manage the financial, legal, reputational and operational risk associated with third-party relationships, such as our suppliers, contract manufacturers, distributors, contractors and external business partners; (11) the ability to rely on and maintain key company and third-party information and operational technology systems, networks and services and maintain the security and functionality of such
Amounts in millions of dollars except per share amounts or as otherwise specified.
14 The Procter & Gamble Company
systems, networks and services and the data contained therein; (12) the ability to successfully manage the demand, supply and operational challenges, as well as governmental responses or mandates, associated with a disease outbreak, including epidemics, pandemics or similar widespread public health concerns; (13) the ability to stay on the leading edge of innovation, obtain necessary intellectual property protections and successfully respond to changing consumer habits, evolving digital marketing and selling platform requirements and technological advances attained by, and patents granted to, competitors; (14) the ability to successfully manage our ongoing acquisition, divestiture and joint venture activities, in each case to achieve the Company’s overall business strategy and financial objectives, without impacting the delivery of base business objectives; (15) the ability to successfully achieve productivity improvements and cost savings and manage ongoing organizational changes while successfully identifying, developing and retaining key employees, including in key growth markets where the availability of skilled or experienced employees may be limited; (16) the ability to successfully manage current and expanding regulatory and legal requirements and matters (including, without limitation, those laws and regulations involving product liability, product and packaging composition, manufacturing processes, intellectual property, labor and employment, antitrust, privacy, cybersecurity and data protection, artificial intelligence, tax, the environment, due diligence, risk oversight, accounting and financial reporting) and to resolve new and pending matters within current estimates; (17) the ability to manage changes in applicable tax laws and regulations; and (18) the ability to successfully achieve our ambition of reducing our greenhouse gas emissions and delivering progress towards our environmental sustainability priorities. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from those projected herein is included in the section titled "Economic Conditions and Uncertainties" and the section titled "Risk Factors" (Part II, Item 1A) of this Form 10-Q.
Purpose, Approach and Non-GAAP Measures
The purpose of Management's Discussion and Analysis (MD&A) is to provide an understanding of Procter & Gamble's financial condition, results of operations and cash flows by focusing on changes in certain key measures from year to year. The MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and accompanying Notes.
The MD&A is organized in the following sections:
•Overview
•Summary of Results – Nine Months Ended March 31, 2025
•Economic Conditions and Uncertainties
•Results of Operations – Three and Nine Months Ended March 31, 2025
•Segment Results – Three and Nine Months Ended March 31, 2025
•Liquidity and Capital Resources
•Measures Not Defined by U.S. GAAP
Throughout the MD&A we refer to measures used by management to evaluate performance, including unit volume growth, net sales, net earnings, diluted net earnings per common share (diluted EPS) and operating cash flow. We also refer to a number of financial measures that are not defined under U.S. GAAP, consisting of organic sales growth, Core earnings per share (Core EPS), adjusted free cash flow and adjusted free cash flow productivity. The explanation at the end of the MD&A provides the definition of these non-GAAP measures, details on the use and the derivation of these measures, as well as reconciliations to the most directly comparable U.S. GAAP measure.
Management also uses certain market share and market consumption estimates to evaluate performance relative to competition despite some limitations on the availability and comparability of share and consumption information. References to market share and consumption in the MD&A are based on a combination of vendor-purchased traditional brick-and-mortar and online data in key markets as well as internal estimates. All market share references represent the percentage of sales of our products in dollar terms on a constant currency basis relative to all product sales in the category. The Company measures quarter and fiscal year to date market share through the most recent period for which market share data is available, which typically reflects a lag time of one or two months as compared to the end of the reporting period. Management also uses unit volume growth to evaluate drivers of changes in net sales. Organic volume growth reflects year-over-year changes in unit volume excluding the impacts of acquisitions and divestitures and certain one-time items, if applicable, and is used to explain changes in organic sales. Certain columns and rows may not add due to rounding.
OVERVIEW
P&G is a global leader in the fast-moving consumer goods industry, focused on providing branded consumer packaged goods of superior quality and value to our consumers around the world. Our products are sold in about 180 countries and territories, primarily through mass merchandisers, e-commerce (including social commerce) channels, grocery stores, membership club stores, drug stores, department stores, distributors, wholesalers, specialty beauty stores (including airport duty-free stores), high-frequency stores, pharmacies, electronics stores and professional channels. We also sell direct to individual consumers. We have on-the-ground operations in about 70 countries.
Our market environment is highly competitive with global, regional and local competitors. In many of the markets and industry segments in which we sell our products, we compete against other branded products as well as retailers' private-label brands.
The Procter & Gamble Company 15
Additionally, many of the product segments in which we compete are differentiated by price tiers (referred to as super-premium, premium, mid-tier and value-tier products). We believe we are well positioned in the industry segments and markets in which we operate, often holding a leadership or significant market share position.
The table below lists our reportable segments, including the product categories and brand composition within each segment.
| | | | | | | | |
| Reportable Segments | Product Categories (Sub-Categories) | Major Brands |
| Beauty | Hair Care (Conditioners, Shampoos, Styling Aids, Treatments) | Head & Shoulders, Herbal Essences, Pantene, Rejoice |
Personal Care (1) (Antiperspirants and Deodorants, Personal Cleansing) | Native, Old Spice, Safeguard, Secret |
Skin Care (1) (Facial Moisturizers, Cleaners and Treatments) | Olay, SK-II |
| Grooming | Grooming (Appliances, Female Blades & Razors, Male Blades & Razors, Pre- and Post-Shave Products, Other Grooming) | Braun, Gillette, Venus |
| Health Care | Oral Care (Toothbrushes, Toothpastes, Other Oral Care) | Crest, Oral-B |
Personal Health Care (Gastrointestinal, Pain Relief, Rapid Diagnostics, Respiratory, Vitamins/Minerals/Supplements, Other Personal Health Care) | Metamucil, Neurobion, Pepto-Bismol, Vicks |
| Fabric & Home Care | Fabric Care (Fabric Enhancers, Laundry Additives, Laundry Detergents) | Ariel, Downy, Gain, Tide |
Home Care (Air Care, Dish Care, P&G Professional, Surface Care) | Cascade, Dawn, Fairy, Febreze, Mr. Clean, Swiffer |
| Baby, Feminine & Family Care | Baby Care (Baby Wipes, Taped Diapers and Pants) | Luvs, Pampers |
Feminine Care (Adult Incontinence, Menstrual Care) | Always, Always Discreet, Tampax |
Family Care (Paper Towels, Tissues, Toilet Paper) | Bounty, Charmin, Puffs |
(1) Effective July 1, 2024, the Beauty reportable business segment separated Skin and Personal Care into individual operating segments, Skin Care and Personal Care. This transition included separation of the management team, strategic decision-making, innovation plans, financial targets, budgets and management reporting.
Throughout the MD&A, we reference business results by region, which are comprised of North America, Europe, Greater China, Latin America, Asia Pacific and India, Middle East and Africa (IMEA).
The following table provides the percentage of net sales and net earnings by reportable business segment (excluding Corporate) for the three and nine months ended March 31, 2025:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2025 | | Nine Months Ended March 31, 2025 |
| Net Sales | | Net Earnings | | Net Sales | | Net Earnings |
| Beauty | 18 | % | | 15 | % | | 18 | % | | 17 | % |
| Grooming | 8 | % | | 9 | % | | 8 | % | | 9 | % |
| Health Care | 15 | % | | 16 | % | | 15 | % | | 16 | % |
| Fabric & Home Care | 35 | % | | 36 | % | | 35 | % | | 34 | % |
| Baby, Feminine & Family Care | 24 | % | | 24 | % | | 24 | % | | 24 | % |
| Total Company | 100 | % | | 100 | % | | 100 | % | | 100 | % |
RECENT DEVELOPMENTS
Limited Market Portfolio Restructuring
In the fiscal year ended June 30, 2024, the Company started a limited market portfolio restructuring of its business operations, primarily in certain Enterprise Markets, including Argentina and Nigeria, to address challenging macroeconomic and fiscal conditions. During the period ended September 30, 2024, the Company completed this limited market portfolio restructuring with the substantial liquidation of its operations in Argentina and recorded incremental restructuring charges of approximately $0.8 billion after tax, comprised primarily of non-cash charges for accumulated foreign currency translation losses previously included in Accumulated other comprehensive income/(loss). The total incremental restructuring charges incurred under the program beginning in the three-month period ended December 31, 2023, through the three-month period ended September 30, 2024, were approximately $1.2 billion after tax.
Consistent with our historical policies for ongoing restructuring-type activities, resulting charges were funded by and included
16 The Procter & Gamble Company
within Corporate for segment reporting. Restructuring charges above the normal ongoing level of restructuring costs are reported as non-core charges. For more details on the restructuring program, refer to Note 11 to the Consolidated Financial Statements.
SUMMARY OF RESULTS – Nine Months Ended March 31, 2025
The following are highlights of results for the nine months ended March 31, 2025, versus the nine months ended March 31, 2024:
•Net sales were $63.4 billion, a decrease of $112 million versus the prior year period. Net sales increased low single digits in Health Care, and decreased low single digits in Baby, Feminine & Family Care and Beauty. Net sales in Grooming and Fabric & Home Care were unchanged. Organic sales, which exclude the impacts of acquisitions and divestitures and foreign exchange, increased 2%. Organic sales increased low single digits in Health Care, Grooming, Fabric & Home Care, Beauty and Baby, Feminine & Family Care.
•Net earnings were $12.4 billion, an increase of $609 million, or 5%, versus the prior year period due to the non-cash impairment charge of $1.3 billion ($1.0 billion after tax) on the Gillette intangible asset in the prior year, partially offset by higher restructuring charges in the current year of $0.8 billion after tax related to the substantial liquidation of operations in certain Enterprise Markets, including Argentina.
•Net earnings attributable to Procter & Gamble were $12.4 billion, an increase of $617 million, or 5%, versus the prior year period.
•Diluted EPS increased 6% to $5.03 due to the increase in net earnings. Core EPS, which excludes incremental restructuring charges and the prior year Gillette intangible asset impairment charge, increased 3% to $5.35.
•Operating cash flow was $12.8 billion. Adjusted free cash flow, which is defined as operating cash flow less capital expenditures and excluding payments for the transitional tax resulting from the U.S. Tax Act, was $10.6 billion. Adjusted free cash flow productivity, which is defined as adjusted free cash flow as a percentage of net earnings excluding a non-cash charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina, was 80%.
ECONOMIC CONDITIONS AND UNCERTAINTIES
Global Economic Conditions. Our products are sold in numerous countries worldwide, with more than half our sales generated outside the United States. Our largest international markets are Greater China, the United Kingdom, Canada, Japan and Germany and collectively comprised approximately 20% of our net sales in fiscal 2024. As a result, we are exposed to global macroeconomic factors, geopolitical tensions and government policies. We are exposed to various risks due to economic, political and social instabilities, market volatility, natural disasters, debt and credit issues, currency controls, new or increased tariffs (including any such tariffs between the U.S. and China or the U.S. and Canada), foreign exchange and interest rate changes. These risks can negatively impact our net sales, net earnings and cash flows. For example, we are exposed to risks due to the ongoing war between Russia and Ukraine. Our Russia business accounted for less than 2% of consolidated net sales and net earnings in the fiscal year ended June 30, 2024 and less than 2% of net assets as of June 30, 2024.
Foreign Exchange. We have significant exposure to exchange rate fluctuations, both due to translation and transaction exposures. Translation exposures arise from measuring income statements of foreign subsidiaries with functional currencies other than the U.S. dollar. Transaction exposures involve impacts from 1) input costs that are denominated in currencies other than the local reporting currency and 2) revaluation of working capital balances denominated in currencies other than the functional currency. We have experienced significant foreign exchange impacts in the past due to the weakening of certain foreign currencies versus the U.S. dollar, which have negatively impacted net sales, net earnings and cash flows. In response to the devaluation of foreign currencies (including those deemed highly inflationary), any lags or inability (due to government restrictions) to implement price increases or the negative impacts of such actions on product consumption may lead to a decline in our net sales, net earnings and cash flows.
Commodities and Supply Chain. Our costs are subject to fluctuations due to changes in commodity and input material prices, transportation costs, inflationary impacts and productivity efforts. We have significant exposures to certain commodities and input materials, in particular certain oil-derived materials like resins and paper-based materials like pulp. Volatility in the market price of commodities and input materials directly affects our costs. Disruptions in manufacturing, supply and distribution operations can lead to increased costs. Legal or regulatory requirements and sustainability initiatives may result in increased costs. We strive to implement, achieve and sustain cost improvement plans, including supply chain optimization and general overhead and workforce optimization. Increased pricing in response to certain inflationary or cost increases may also offset portions of the cost impacts; however, such price increases may negatively impact product consumption. If we are unable to manage cost impacts through pricing actions and consistent productivity improvements, it may negatively impact our net sales, net earnings and cash flows.
Government Policies. We are exposed to changes in U.S. and foreign government legislative, regulatory or enforcement policies that can have a negative impact on net sales, net earnings and cash flows. These include tax policy changes (both U.S. and foreign), including those resulting from the current work being led by the OECD/G20 Inclusive Framework focused on
The Procter & Gamble Company 17
"Addressing the Challenges of the Digitalization of the Economy”. Government controls such as currency exchanges, pricing and import authorizations as well as government policies related to environmental and climate change matters and changes to international trade agreements, including tariffs, can also impact our financial performance.
For additional information on risk factors that could impact our business results, please refer to Risk Factors in Part I, Item 1A of the Company's Form 10-K for the fiscal year ended June 30, 2024.
RESULTS OF OPERATIONS – Three Months Ended March 31, 2025
The following discussion provides a review of results for the three months ended March 31, 2025, versus the three months ended March 31, 2024.
| | | | | | | | | | | | | | | | | |
| Three Months Ended March 31 |
| Amounts in millions, except per share amounts | 2025 | | 2024 | | % Chg |
| Net sales | $ | 19,776 | | $ | 20,195 | | (2)% |
| Operating income | 4,558 | | 4,460 | | 2% |
| Earnings before income taxes | 4,661 | | 4,592 | | 2% |
| Net earnings | 3,793 | | 3,781 | | —% |
| Net earnings attributable to Procter & Gamble | 3,769 | | 3,754 | | —% |
| Diluted net earnings per common share | 1.54 | | 1.52 | | 1% |
| Core net earnings per common share | 1.54 | | 1.52 | | 1% |
|
| Three Months Ended March 31 |
| COMPARISONS AS A PERCENTAGE OF NET SALES | 2025 | | 2024 | | Basis Pt Chg |
| Gross margin | 51.0 | % | | 51.2 | % | | (20) | |
| Selling, general & administrative expense | 27.9 | % | | 29.1 | % | | (120) | |
| Operating income | 23.0 | % | | 22.1 | % | | 90 | |
| Earnings before income taxes | 23.6 | % | | 22.7 | % | | 90 | |
| Net earnings | 19.2 | % | | 18.7 | % | | 50 | |
| Net earnings attributable to Procter & Gamble | 19.1 | % | | 18.6 | % | | 50 | |
Net Sales
Net sales for the quarter decreased 2% to $19.8 billion. The decrease in net sales was due to unfavorable foreign exchange of 2% and unit volume decline of 1%, partially offset by higher pricing of 1%. Mix had a neutral impact on net sales. Excluding the impact of acquisitions and divestitures and foreign exchange, organic sales increased 1% and organic volume was unchanged.
The following table summarizes key drivers of the change in net sales by reportable segment:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Sales Change Drivers 2025 vs. 2024 (Three Months Ended March 31) (1) |
| Volume with Acquisitions & Divestitures | | Volume Excluding Acquisitions & Divestitures | | Foreign Exchange | | Price | | Mix | | Other (2) | | Net Sales Growth |
| Beauty | — | % | | 1 | % | | (3) | % | | 3 | % | | (2) | % | | — | % | | (2) | % |
| Grooming | 1 | % | | 1 | % | | (4) | % | | 2 | % | | — | % | | (1) | % | | (2) | % |
| Health Care | (1) | % | | (1) | % | | (3) | % | | 1 | % | | 3 | % | | — | % | | — | % |
| Fabric & Home Care | (1) | % | | — | % | | (2) | % | | — | % | | — | % | | — | % | | (3) | % |
| Baby, Feminine & Family Care | (2) | % | | (2) | % | | (2) | % | | — | % | | 1 | % | | (1) | % | | (4) | % |
| Total Company | (1) | % | | — | % | | (2) | % | | 1 | % | | — | % | | — | % | | (2) | % |
(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.
Operating Costs
Gross margin decreased 20 basis points to 51.0% of net sales for the quarter. The decrease in gross margin was due to:
•120 basis points of decline from unfavorable product mix,
•40 basis points of product and packaging investments,
18 The Procter & Gamble Company
•30 basis points of higher commodity costs and
•20 basis points of unfavorable foreign exchange impacts.
These impacts were partially offset by:
•160 basis points of manufacturing productivity savings and
•30 basis points of increase due to higher pricing.
Total SG&A spending decreased 6% to $5.5 billion versus the prior year period due to decreased marketing spending and overhead costs. SG&A as a percentage of net sales decreased 120 basis points to 27.9% due to decreases in marketing spending and overhead costs as a percentage of net sales. Marketing spending as a percentage of net sales decreased 30 basis points due to productivity savings. Overhead costs as a percentage of net sales decreased 70 basis points as wage inflation and foreign exchange headwinds were more than offset by productivity savings, which includes adjustments to expected variable compensation payouts. Other operating expenses as a percentage of net sales decreased 20 basis points due to favorable foreign exchange impacts. Productivity-driven cost savings delivered 120 basis points of benefit to SG&A as a percentage of net sales.
Operating income increased $98 million, or 2%, to $4.6 billion and operating margin increased 90 basis points to 23.0% versus the prior year period primarily due to decreased marketing spending and overhead costs, partially offset by the decrease in gross margin, the components of which are described above.
Non-Operating Expenses and Income
Interest expense was $217 million for the quarter, a decrease of $16 million versus the prior year period. Interest income was $111 million for the quarter, an increase of $7 million versus the prior year period. Other non-operating income/(expense) was $210 million, which is a decrease of $50 million versus the prior year period due to gains from the sale of minor brands in the prior year.
Income Taxes
The effective income tax rate for the three months ended March 31, 2025, was 18.6%, compared to 17.7% for the three months ended March 31, 2024. The increase in the effective tax rate was primarily driven by lower excess tax benefits of share-based compensation.
Net Earnings
Net earnings were unchanged at $3.8 billion versus the prior year period due primarily to the increase in operating income, partially offset by the decrease in other non-operating income and the increase in the effective tax rate. Foreign exchange had a negative impact of approximately $75 million on net earnings for the quarter, including both transactional and translational impacts from converting earnings from foreign subsidiaries to U.S. dollars. Net earnings attributable to Procter & Gamble were unchanged at $3.8 billion for the quarter. Diluted EPS increased 1% to $1.54 versus the prior year period.
RESULTS OF OPERATIONS – Nine Months Ended March 31, 2025
The following discussion provides a review of results for the nine months ended March 31, 2025, versus the nine months ended March 31, 2024.
| | | | | | | | | | | | | | | | | |
| Nine Months Ended March 31 |
| Amounts in millions, except per share amounts | 2025 | | 2024 | | % Chg |
| Net sales | $ | 63,395 | | $ | 63,507 | | —% |
| Operating income | 16,096 | | 14,660 | | 10% |
| Earnings before income taxes | 15,646 | | 14,891 | | 5% |
| Net earnings | 12,439 | | 11,830 | | 5% |
| Net earnings attributable to Procter & Gamble | 12,359 | | 11,742 | | 5% |
| Diluted net earnings per common share | 5.03 | | 4.75 | | 6% |
| Core net earnings per common share | 5.35 | | 5.19 | | 3% |
|
| Nine Months Ended March 31 |
| COMPARISONS AS A PERCENTAGE OF NET SALES | 2025 | | 2024 | | Basis Pt Chg |
| Gross margin | 51.8 | % | | 52.0 | % | | (20) | |
| Selling, general & administrative expense | 26.4 | % | | 26.8 | % | | (40) | |
| Operating income | 25.4 | % | | 23.1 | % | | 230 | |
| Earnings before income taxes | 24.7 | % | | 23.4 | % | | 130 | |
| Net earnings | 19.6 | % | | 18.6 | % | | 100 | |
| Net earnings attributable to Procter & Gamble | 19.5 | % | | 18.5 | % | | 100 | |
The Procter & Gamble Company 19
Net Sales
Net sales for the period were $63.4 billion, a $112 million decline versus the prior year period as a 1% decline from unfavorable foreign exchange was partially offset by a 1% increase from higher pricing. Volume and mix were unchanged. Excluding the impact of acquisitions and divestitures and foreign exchange, organic sales increased 2% and organic volume increased 1%.
The following table summarizes key drivers of the change in net sales by reportable segment:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Sales Change Drivers 2025 vs. 2024 (Nine Months Ended March 31) (1) |
| Volume with Acquisitions & Divestitures | | Volume Excluding Acquisitions & Divestitures | | Foreign Exchange | | Price | | Mix | | Other (2) | | Net Sales Growth |
| Beauty | (1) | % | | 1 | % | | (1) | % | | 2 | % | | (2) | % | | — | % | | (2) | % |
| Grooming | 3 | % | | 3 | % | | (2) | % | | 1 | % | | (1) | % | | (1) | % | | — | % |
| Health Care | (1) | % | | — | % | | (1) | % | | 1 | % | | 3 | % | | — | % | | 2 | % |
| Fabric & Home Care | — | % | | 1 | % | | (1) | % | | — | % | | 1 | % | | — | % | | — | % |
| Baby, Feminine & Family Care | — | % | | 1 | % | | (1) | % | | — | % | | — | % | | — | % | | (1) | % |
| Total Company | — | % | | 1 | % | | (1) | % | | 1 | % | | — | % | | — | % | | — | % |
(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.
Operating Costs
Gross margin decreased 20 basis points to 51.8% of net sales for the period. The decrease in gross margin was due to:
•100 basis points of decline from unfavorable product mix,
•40 basis points of product and packaging investments,
•30 basis points of higher commodity costs,
•20 basis points of higher transportation services and other costs and
•10 basis points of unfavorable foreign exchange impacts.
These impacts were partially offset by:
•160 basis points of manufacturing productivity savings and
•20 basis points of increase due to higher pricing.
Total SG&A spending decreased 1% to $16.8 billion versus the prior year period due to higher foreign exchange transactional charges in the prior year period and decreased overhead costs. SG&A as a percentage of net sales decreased 40 basis points to 26.4% due primarily to a decrease in other operating expenses as a percentage of sales. Marketing spending as a percentage of net sales increased 10 basis points as the increase in marketing spending was partially offset by productivity savings. Overhead costs as a percentage of net sales were unchanged as wage inflation was offset by productivity savings, which includes adjustments to expected variable compensation payouts. Other operating expenses as a percentage of net sales decreased 40 basis points primarily driven by favorable foreign exchange impacts. Productivity-driven cost savings delivered 100 basis points of benefit to SG&A as a percentage of net sales.
Operating income increased $1.4 billion, or 10%, to $16.1 billion and operating margin increased 230 basis points to 25.4% versus the prior year period due primarily to the non-cash impairment charge of $1.3 billion ($1.0 billion after tax) on the Gillette intangible asset in the prior year.
Non-Operating Expenses and Income
Interest expense was $695 million for the period, a decrease of $10 million versus the prior year period. Interest income was $365 million for the period, a decrease of $1 million versus the prior year period. Other non-operating income/(expense) was $(120) million, which is a decrease of $690 million versus the prior year period primarily due to the non-cash charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina recorded in the period ended September 30, 2024.
Income Taxes
The effective income tax rate for the nine months ended March 31, 2025, was 20.5%, compared to 20.6% for the nine months ended March 31, 2024. The decrease in the effective tax rate was primarily driven by higher excess tax benefits of share-based compensation, favorable geographic mix impacts and decreases from discrete impacts related to uncertain tax positions, partially offset by a 100 basis-point increase due primarily to the charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina.
20 The Procter & Gamble Company
Net Earnings
Net earnings increased $609 million, or 5%, to $12.4 billion, as the increase in operating income, the components of which are described above, were partially offset by the non-cash charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina recorded in the period ended September 30, 2024. Foreign exchange had a negative impact of approximately $58 million on net earnings for the period, including both transactional and translational impacts from converting earnings from foreign subsidiaries to U.S. dollars. Net earnings attributable to Procter & Gamble increased $617 million, or 5%, to $12.4 billion for the period. Diluted EPS increased 6% to $5.03 versus the prior year period due to the increase in net earnings. Core EPS, which represents diluted EPS excluding charges for incremental restructuring and the impairment of the Gillette intangible asset, increased 3% to $5.35.
SEGMENT RESULTS – Three and Nine Months Ended March 31, 2025
The following discussion provides a review of results by reportable business segment. Analysis of the results for the three and nine months ended March 31, 2025, is provided based on a comparison to the three and nine months ended March 31, 2024. The primary financial measures used to evaluate segment performance are net sales and net earnings. The table below provides supplemental information on net sales, earnings before income taxes and net earnings by reportable business segment for the three and nine months ended March 31, 2025, versus the comparable prior year period (dollar amounts in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2025 |
| Net Sales | | % Change Versus Year Ago | | Earnings/(Loss) Before Income Taxes | | % Change Versus Year Ago | | Net Earnings/(Loss) | | % Change Versus Year Ago |
| Beauty | $ | 3,490 | | | (2) | % | | $ | 684 | | | (9) | % | | $ | 539 | | | (8) | % |
| Grooming | 1,505 | | | (2) | % | | 404 | | | 7 | % | | 321 | | | 6 | % |
| Health Care | 2,880 | | | — | % | | 734 | | | 7 | % | | 569 | | | 8 | % |
| Fabric & Home Care | 6,948 | | | (3) | % | | 1,642 | | | (3) | % | | 1,285 | | | (1) | % |
| Baby, Feminine & Family Care | 4,755 | | | (4) | % | | 1,150 | | | (11) | % | | 880 | | | (12) | % |
| Corporate | 198 | | | N/A | | 48 | | | N/A | | 200 | | | N/A |
| Total Company | $ | 19,776 | | | (2) | % | | $ | 4,661 | | | 2 | % | | $ | 3,793 | | | — | % |
| | | | | | | | | | | |
| Nine Months Ended March 31, 2025 |
| Net Sales | | % Change Versus Year Ago | | Earnings/(Loss) Before Income Taxes | | % Change Versus Year Ago | | Net Earnings/(Loss) | | % Change Versus Year Ago |
| Beauty | $ | 11,231 | | | (2) | % | | $ | 2,746 | | | (12) | % | | $ | 2,158 | | | (11) | % |
| Grooming | 4,980 | | | — | % | | 1,493 | | | 3 | % | | 1,206 | | | 4 | % |
| Health Care | 9,277 | | | 2 | % | | 2,662 | | | 6 | % | | 2,068 | | | 7 | % |
| Fabric & Home Care | 22,233 | | | — | % | | 5,709 | | | (1) | % | | 4,473 | | | 1 | % |
| Baby, Feminine & Family Care | 15,155 | | | (1) | % | | 3,997 | | | (4) | % | | 3,065 | | | (3) | % |
| Corporate | 520 | | | N/A | | (961) | | | N/A | | (531) | | | N/A |
| Total Company | $ | 63,395 | | | — | % | | $ | 15,646 | | | 5 | % | | $ | 12,439 | | | 5 | % |
Beauty
Three months ended March 31, 2025, compared with three months ended March 31, 2024
Beauty net sales decreased 2% to $3.5 billion, as unfavorable foreign exchange of 3% and unfavorable geographic mix of 2% were partially offset by positive impacts of higher pricing of 3%. Unit volume was unchanged. Excluding the impact of acquisitions and divestitures and foreign exchange, organic sales increased 2% and organic volume increased 1%. Global market share of the Beauty segment decreased 0.4 points.
•Hair Care net sales decreased mid-single digits. Negative impacts of unfavorable foreign exchange, divestitures and a unit volume decrease were partially offset by positive impacts of favorable product mix and higher pricing (primarily in Latin America and North America). The volume decrease was driven by a decline in Greater China (due to market contraction and the impact of divestitures), partially offset by growth in Latin America and North America (both due to market growth). Organic sales were unchanged as a high single-digit growth in Latin America and a mid-single-digit growth in North America were offset by a double-digit decline in Greater China. Global market share of the Hair Care category decreased 1 point.
•Personal Care net sales increased high single digits. Positive impacts of an increase in unit volume and higher pricing (primarily in North America) were partially offset by negative impacts from geographic mix and unfavorable foreign
The Procter & Gamble Company 21
exchange. The volume increase was driven by growth in Europe (due to distribution expansion and innovation), North America (due to innovation), and Latin America (due to market growth). Organic sales increased high single digits due to a more than 20% growth in Europe, a mid-teens growth in Latin America and a high single-digit growth in North America. Global market share of the Personal Care category increased 0.6 points.
•Skin Care net sales decreased mid-single digits. Negative impacts of a decrease in unit volume, unfavorable foreign exchange and unfavorable geographic mix were partially offset by positive impacts from higher pricing (primarily in Greater China). The volume decrease was driven by North America and Europe (both due to distribution losses). Organic sales decreased low single digits due to a low teens decline in North America and a high single-digit decline in Asia Pacific, partially offset by a high single-digit growth in Greater China. Global market share of the Skin Care category decreased 0.8 points.
Net earnings decreased 8% to $539 million due to a decrease in net sales and a 110 basis-point decline in net earnings margin. Net earnings margin decreased due to a decrease in gross margin and an increase in SG&A as a percentage of net sales. The gross margin decline was driven by unfavorable category and geographic mix, partially offset by increased productivity savings. SG&A as a percentage of net sales increased due to increases in marketing, overhead spending and higher foreign exchange transactional charges.
Nine months ended March 31, 2025, compared with nine months ended March 31, 2024
Beauty net sales decreased 2% to $11.2 billion, driven by unfavorable mix of 2% (due primarily to the decline of the super-premium SK-II brand, which has higher than segment-average selling prices), unfavorable foreign exchange of 1% and a unit volume decrease of 1%, partially offset by the positive impacts of higher pricing of 2%. Excluding the impact of acquisitions and divestitures and foreign exchange, organic volume and organic sales increased 1%. Global market share of the Beauty segment decreased 0.2 points.
•Hair Care net sales decreased mid-single digits. Negative impacts of divestitures, declining unit volume and unfavorable foreign exchange were partially offset by positive impacts of favorable product mix and higher pricing (primarily in Latin America and Europe). The decline in unit volume was driven by a decline in Greater China (due to market contraction and the impact of divestitures), partially offset by growth in North America and Latin America (both due to market growth). Organic sales increased low single digits due to a high single-digit growth in Latin America and a mid-single-digit growth in North America, partially offset by a double-digit decline in Greater China. Global market share of the Hair Care category decreased 0.8 points.
•Personal Care net sales increased high single digits. Positive impacts of an increase in unit volume and higher pricing (primarily in North America) were partially offset by unfavorable geographic mix and unfavorable foreign exchange. The volume increase was driven by growth in North America (due to innovation), Europe (due to distribution expansion and innovation) and Latin America (due to market growth). Organic sales increased double digits due to a more than 20% growth in Europe, a 20% growth in Latin America and a double-digit growth in North America, partially offset by a mid-single-digit decline in Greater China. Global market share of the Personal Care category increased 0.6 points.
•Skin Care net sales decreased double digits. Negative impacts of a decrease in unit volume and unfavorable product mix (due primarily to the decline of the super-premium SK-II brand, which has higher than category-average selling prices), were partially offset by higher pricing (primarily in Greater China). The volume decrease was driven by declines in all regions, led by North America (due to distribution losses) and Greater China (due to market contraction). Organic sales decreased double digits due to a high-teens decline in North America, a mid-teens decline in Asia Pacific and a mid-single-digit decline in Greater China. Global market share of the Skin Care category decreased 0.6 points
Net earnings decreased 11% to $2.2 billion due to a decrease in net sales and a 190 basis-point decline in net earnings margin. Net earnings margin decreased due to a decrease in gross margin and an increase in SG&A as a percentage of net sales. The gross margin decline was driven by unfavorable product mix (due to the decline of the super-premium SK-II brand) and higher commodities, partially offset by increased productivity savings. SG&A as a percentage of net sales increased due primarily to an increase in marketing and overhead spending.
Grooming
Three months ended March 31, 2025, compared with three months ended March 31, 2024
Grooming net sales decreased 2% to $1.5 billion as the negative impacts from unfavorable foreign exchange of 4% and divestitures of 1% were partially offset by the positive impacts from higher pricing of 2% (driven primarily by Latin America, Europe and North America) and a unit volume increase of 1%. The volume increase was driven by growth in IMEA (due to increased distribution) and Europe (due to market growth), partially offset by volume decline in Latin America (due to competitive activity). Excluding the impact of acquisitions and divestitures and foreign exchange, organic sales increased 3% driven by high single-digit growth in IMEA and low single-digit growth in North America and Europe. Global market share of the Grooming segment decreased 0.5 points.
Net earnings increased 6% to $321 million due to 160 basis-point increase in net earnings margin. Net earnings margin increased due to an increase in gross margin and a decrease in SG&A as a percentage of net sales. The gross margin
22 The Procter & Gamble Company
improvement was primarily driven by increased productivity savings and increased pricing, partially offset by unfavorable geographic mix. SG&A as a percentage of net sales decreased due primarily to a reduction in marketing spending.
Nine months ended March 31, 2025, compared with nine months ended March 31, 2024
Grooming net sales were unchanged at $5.0 billion as the benefits of a 3% increase in unit volume and higher pricing of 1% (driven primarily by Latin America and IMEA) were offset by unfavorable foreign exchange of 2%, unfavorable geographic mix of 1% and the negative impact from divestitures of 1%. The volume increase was driven by growth in IMEA (due to increased distribution) and Europe (due to market growth). Excluding the impact of acquisitions and divestitures and foreign exchange, Grooming organic sales increased 3% due to low-teens growth in IMEA, high single-digit growth in Asia Pacific and low single-digit growth in Europe. Global market share of the Grooming segment increased 0.1 points.
Net earnings increased 4% to $1.2 billion due to a 90 basis-point increase in net earnings margin. Net earnings margin increased due to a decrease in SG&A as a percentage of net sales, an increase in gross margin and a lower effective tax rate. The gross margin increase was driven primarily by productivity savings, partially offset by unfavorable geographic mix. SG&A as a percentage of net sales decreased due to higher foreign exchange transactional charges in the prior year period. The lower effective tax rate was driven by favorable geographic mix.
Health Care
Three months ended March 31, 2025, compared with three months ended March 31, 2024
Health Care net sales were unchanged at $2.9 billion as the benefits of favorable product mix of 3% and higher pricing of 1% were offset by unfavorable foreign exchange impacts of 3% and a 1% decrease in unit volume. Excluding the impact of acquisitions and divestitures and foreign exchange, organic sales increased 4%. Global market share of the Health Care segment increased 0.3 points.
•Oral Care net sales decreased low single digits driven by a unit volume decline and negative impacts of unfavorable foreign exchange, partially offset by positive impacts of favorable product mix (due to growth of power brushes and premium paste, which have higher than category-average selling prices). The unit volume decrease was due to declines in all regions, led by Greater China (due to market contraction and competitive activity) and IMEA (due to share losses). Organic sales increased low single digits driven by a mid-single-digit increase in Europe, partially offset by a mid-teens decrease in Greater China. Global market share of the Oral Care category increased 0.1 points.
•Personal Health Care net sales increased mid-single digits driven by a unit volume increase and the positive impact of higher pricing (driven by Latin America and Europe), partially offset by the negative impact of unfavorable foreign exchange. The unit volume increase was primarily due to growth in North America (due to the later peak in the respiratory season) and IMEA (due to innovation). Organic sales increased high single digits driven by low-teens growth in Latin America and high single-digit growth in North America. Global market share of the Personal Health Care category increased 0.4 points.
Net earnings increased 8% to $569 million due to a 140 basis-point increase in net earnings margin. Net earnings margin increased due to an increase in gross margin, a decrease in SG&A as a percentage of net sales and a lower effective tax rate. The gross margin increase was driven primarily by productivity savings and higher pricing, partially offset by unfavorable geographic mix. SG&A as a percentage of net sales decreased due to a decline in marketing spending. The lower effective tax rate was driven by favorable geographic mix.
Nine months ended March 31, 2025, compared with nine months ended March 31, 2024
Health Care net sales increased 2% to $9.3 billion driven by favorable geographic and product mix of 3% and higher pricing of 1%, partially offset by unfavorable foreign exchange of 1% and a 1% decrease in unit volume. Excluding the impact of acquisitions and divestitures and foreign exchange, organic sales increased 3% and organic volume was unchanged. Global market share of the Health Care segment increased 0.2 points.
•Oral Care net sales increased low single digits due to the positive impacts of favorable product mix (due to growth of premium paste and power brushes, which have higher than category-average selling prices), partially offset by a decline in unit volume and unfavorable foreign exchange. The unit volume decrease was due to a decline in Greater China (due to market contraction and increased competitive activity) and IMEA (due to share losses), partially offset by growth in North America (due to market growth and innovation). Organic sales also increased low single digits due to a high single-digit increase in Europe and a low single-digit increase in North America, partially offset by mid-teens decreases in Greater China and IMEA. Global market share of the Oral Care category increased 0.1 points.
•Personal Health Care net sales increased low single digits due to a unit volume increase and the positive impacts of higher pricing (driven by Latin America and Europe) and favorable geographic mix, partially offset by the negative impacts of unfavorable foreign exchange. The increase in unit volume was driven by growth in North America (due to distribution gains), partially offset by a decline in IMEA (due to market contraction and increased competitive activity). Organic sales increased mid-single digits due to a high single-digit growth in Latin America and a mid-single-digit growth in both North America and Europe. Global market share of the Personal Health Care category increased 0.2 points.
The Procter & Gamble Company 23
Net earnings increased 7% to $2.1 billion due to net sales growth and a 110 basis-point increase in net earnings margin. Net earnings margin increased due to an increase in gross margin and a decrease in SG&A as a percentage of net sales. The gross margin increase was driven by productivity savings, partially offset by unfavorable geographic mix. SG&A as a percentage of net sales decreased due to decreased marketing spending.
Fabric & Home Care
Three months ended March 31, 2025, compared with three months ended March 31, 2024
Fabric & Home Care net sales decreased 3% to $6.9 billion driven by unfavorable foreign exchange of 2% and a unit volume decrease of 1%. Excluding the impact of foreign exchange and acquisitions and divestitures, organic sales and organic volume were unchanged. Global market share of the Fabric & Home Care segment increased 0.1 points.
•Fabric Care net sales decreased low single digits driven by unfavorable foreign exchange. Unit volume was unchanged as growth in Latin America (due to market growth) and IMEA (due to market growth) was offset by a decline in North America (due to retail inventory reduction). Organic sales were unchanged as the impact of a mid-single-digit growth in Latin America and a low single-digit growth in Europe was offset by the impact of a high single-digit decline in IMEA and a low single-digit decline in North America. Global market share of the Fabric Care category decreased 0.4 points.
•Home Care net sales decreased low single digits driven by a unit volume decrease and unfavorable foreign exchange, partially offset by favorable premium product mix. The decrease in volume was due primarily to a decline in Europe (due to increased competitive activity). Organic sales decreased low single digits driven by a low single-digit decline in Europe, partially offset by a low single-digit growth in North America. Global market share of the Home Care category increased 0.7 points.
Net earnings decreased 1% to $1.3 billion as the decrease in net sales was partially offset by a 40 basis-point increase in net
earnings margin. Net earnings margin increased due to a decrease in SG&A as a percentage of net sales and a lower effective tax rate, partially offset by a decrease in gross margin. The gross margin decrease was driven by unfavorable geographic and product mix, partially offset by productivity savings. SG&A as a percentage of net sales decreased due to a decrease in marketing spending. The lower effective tax rate was driven by favorable geographic mix.
Nine months ended March 31, 2025, compared with nine months ended March 31, 2024
Fabric & Home Care net sales were unchanged at $22.2 billion as favorable product mix of 1% was offset by unfavorable foreign exchange of 1%. Unit volume was unchanged. Excluding the impact of foreign exchange and acquisitions and divestitures, organic sales increased 2% and organic volume increased 1%. Global market share of the Fabric & Home Care segment increased 0.1 points.
•Fabric Care net sales decreased low single digits driven by an unfavorable foreign exchange impact, partially offset by the positive impact of favorable premium product mix. Unit volume was unchanged as growth in Europe (due to innovation) and North America (due to market growth) was offset by declines in Latin America and Asia Pacific (both due to share losses). Organic sales increased low single digits driven by a mid-single-digit increase in Europe and a low single-digit increase in North America, partially offset by a double-digit decrease in IMEA. Global market share of the Fabric Care category decreased 0.1 points.
•Home Care net sales increased low single digits driven by a unit volume increase and favorable premium product mix, partially offset by the impact of unfavorable foreign exchange. The increase in volume was driven by growth in North America (due to innovation). Organic sales increased low single digits driven by mid-single-digit growth in North America and low single-digit growth in Europe. Global market share of the Home Care category increased 0.4 points.
Net earnings increased 1% to $4.5 billion due to a 10 basis-point increase in net earnings margin. Net earnings margin increased due to an increase in gross margin and a lower effective tax rate, partially offset by an increase in SG&A as a percentage of net sales. The gross margin increase was driven by increased productivity savings, partially offset by unfavorable geographic and product mix. SG&A as a percentage of net sales increased due to an increase in marketing and overhead spending, partially offset by higher foreign exchange transactional charges in the prior year period. The lower effective tax rate was driven by favorable geographic mix.
Baby, Feminine & Family Care
Three months ended March 31, 2025, compared with three months ended March 31, 2024
Baby, Feminine & Family Care net sales decreased 4% to $4.8 billion driven by a 2% decrease in unit volume and a 2% decline from unfavorable foreign exchange, partially offset by favorable geographic and product mix of 1%. Excluding the impacts of foreign exchange and acquisitions and divestitures, organic sales decreased 1%. Global market share of the Baby, Feminine & Family Care segment decreased 0.3 points.
•Baby Care net sales decreased mid-single digits. Negative impacts of a decrease in unit volume, unfavorable foreign exchange and divestitures were partially offset by positive impacts of favorable geographic and product mix (due to a higher proportion of premium diapers, which have higher than category-average selling prices). The unit volume decline was driven by IMEA (due to competitive activity), North America (due to distribution loss and competitive activity) and
24 The Procter & Gamble Company
Latin America (due to the impact of divestitures and pricing). Organic sales decreased low single digits driven by a low-teens decline in Asia Pacific and a double-digit decline in IMEA, partially offset by a low-teens increase in Greater China. Global market share of the Baby Care category decreased 0.1 points.
•Feminine Care net sales decreased low single digits driven by a unit volume decline and negative impacts of unfavorable foreign exchange, partially offset by positive impacts of favorable geographic mix. The unit volume decrease was primarily driven by declines in Greater China (due to market contraction and competitive activity) and Latin America (due to share losses), partially offset by growth in North America (due to market growth). Organic sales were unchanged as the impact of a mid-single-digit growth in North America was offset by double-digit declines in Greater China and Latin America. Global market share of the Feminine Care category decreased 0.3 points.
•Net sales in Family Care, which is predominantly a North America business, decreased low single digits driven by a decrease in unit volume (due to retail inventory reduction and competitive activity), lower pricing (due to merchandising investments) and unfavorable product mix (due to growth of larger pack sizes, with lower than category-average selling prices). Organic sales also decreased low single digits. North America market share of the Family Care category decreased 0.4 points.
Net earnings decreased 12% to $880 million due to a decrease in net sales and a 170 basis-point decline in net earnings margin. Net earnings margin decreased due to a decline in gross margin and an increase in SG&A as a percentage of net sales. Gross margin decreased primarily due to higher commodity costs and unfavorable category mix. SG&A as a percentage of net sales increased due to the negative scale effects of the net sales decrease.
Nine months ended March 31, 2025, compared with nine months ended March 31, 2024
Baby, Feminine & Family Care net sales decreased 1% to $15.2 billion driven by unfavorable foreign exchange of 1%. Unit volume was unchanged. Excluding the impacts of foreign exchange and acquisitions and divestitures, organic sales and organic volume increased 1%. Global market share of the Baby, Feminine & Family Care segment decreased 0.2 points.
•Baby Care net sales decreased mid-single digits. Negative impacts of a decrease in unit volume, lower pricing (driven by investments in North America and Europe), unfavorable foreign exchange and divestitures were partially offset by favorable geographic and product mix (due to a higher proportion of premium diapers, which have higher than category-average selling prices). The unit volume decline was across most regions led by IMEA (due to competitive activity), Asia Pacific (due to market contraction) and Latin America (due to the impact of divestitures). Organic sales decreased low single digits primarily driven by a double-digit decline in IMEA and a mid-single-digit decline in Europe. Global market share of the Baby Care category decreased 0.2 points.
•Feminine Care net sales were unchanged. Positive impacts of favorable geographic mix were offset by negative impacts of a decrease in unit volume and unfavorable foreign exchange. The unit volume decrease was primarily driven by declines in Greater China (due to market contraction and competitive activity) and Latin America (due to share losses), partially offset by growth in North America (due to market growth). Organic sales increased low single digits driven by a mid-single-digit growth in North America, partially offset by a mid-single-digit decline in Greater China. Global market share of the Feminine Care category decreased 0.4 points.
•Net sales in Family Care, which is predominantly a North America business, increased low single digits driven by an increase in unit volume (due to retail inventory build, partially offset by competitive activity), partially offset by lower pricing (due to merchandising investments). Excluding the impact of foreign exchange, organic sales increased mid-single digits. North America market share of the Family Care category decreased 0.1 points.
Net earnings decreased 3% to $3.1 billion due to a decrease in net sales and a 60 basis-point decline in net earnings margin. Net earnings margin decreased due to a decrease in gross margin, partially offset by a decrease in SG&A as a percentage of net sales. Gross margin decreased primarily due to higher commodity costs and unfavorable category mix, partially offset by productivity savings. SG&A as a percentage of net sales decreased due to higher foreign exchange transactional charges in the prior year period and a reduction in marketing spending.
Corporate
Corporate includes certain operating and non-operating activities not allocated to specific business segments. These include but are not limited to incidental businesses managed at the corporate level, gains and losses related to certain divested brands or businesses, impacts from various financing and investing activities, impacts related to employee benefits, asset impairments and restructuring activities including manufacturing and workforce optimization. Corporate also includes reconciling items to adjust the accounting policies used within the reportable segments to U.S. GAAP. The most notable ongoing reconciling item is income taxes, which adjusts the blended statutory rates that are reflected in the reportable segments to the overall Company effective tax rate.
For the three months ended March 31, 2025, Corporate net sales increased $70 million to $198 million due to an increase in net sales of incidental businesses managed at the corporate level. Corporate net earnings increased $132 million to $200 million for the quarter due primarily to adjustments to expected variable compensation payouts.
The Procter & Gamble Company 25
For the nine months ended March 31, 2025, Corporate net sales increased $122 million to $520 million due to an increase in net sales of incidental businesses managed at the corporate level. Corporate net earnings increased $783 million to a loss of $531 million due primarily to the non-cash impairment charge of $1.3 billion ($1.0 billion after tax) on the Gillette intangible asset in the prior year, partially offset by incremental restructuring charges in the current year, comprised primarily of accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina.
LIQUIDITY & CAPITAL RESOURCES
Operating Activities
Operating cash flow was $12.8 billion fiscal year to date, a decrease of $1.3 billion versus the prior year period. Net earnings, adjusted for non-cash items (depreciation and amortization, share-based compensation expense, deferred income taxes and loss on sale of assets), generated $15.9 billion of operating cash flow. Working capital and other impacts used $3.1 billion of cash in the period primarily driven by the payment of the transitional tax related to the U.S. Tax Act, a reduction in postretirement benefit and compensation accruals, a reduction in accrued marketing expense and a reduction in accounts payable. Days sales outstanding were flat. Days inventory on hand increased by four days driven by higher inventory for new product initiatives and increased safety stock levels.
Investing Activities
Investing activities used $2.8 billion of cash fiscal year to date primarily driven by capital expenditures.
Financing Activities
Financing activities used $10.4 billion of net cash fiscal year to date, mainly due to dividends to shareholders and treasury stock purchases, partially offset by the impact of stock options and other and a net debt increase.
As of March 31, 2025, our current liabilities exceeded current assets by $9.8 billion. We anticipate being able to support our short-term liquidity and operating needs largely through cash generated from operations. We have strong short- and long-term debt ratings that have enabled and should continue to enable us to refinance our debt as it becomes due at favorable rates in commercial paper and bond markets. In addition, we have agreements with a diverse group of financial institutions that, if needed, should provide sufficient funding to meet short-term financing requirements.
MEASURES NOT DEFINED BY U.S. GAAP
In accordance with the SEC's Regulation S-K Item 10(e), the following provides definitions of the non-GAAP measures and the reconciliation to the most closely related GAAP measure. We believe that these measures provide useful perspective on underlying business trends (i.e., trends excluding non-recurring or unusual items) and results and provide a supplemental measure of period-to-period results. The non-GAAP measures described below are used by management in making operating decisions, allocating financial resources and for business strategy purposes. These measures may be useful to investors, as they provide supplemental information about business performance and provide investors a view of our business results through the eyes of management. These measures are also used to evaluate senior management and are a factor in determining their at-risk compensation. These non-GAAP measures are not intended to be considered by the user in place of the related GAAP measures but rather as supplemental information to our business results. These non-GAAP measures may not be the same as similar measures used by other companies due to possible differences in method and in the items or events being adjusted.
Organic sales growth. Organic sales growth is a non-GAAP measure of sales growth excluding the impacts of acquisitions and divestitures and foreign exchange from year-over-year comparisons. We believe this measure provides investors with a supplemental understanding of underlying sales trends by providing sales growth on a consistent basis. This measure is used in assessing the achievement of management goals for at-risk compensation.
26 The Procter & Gamble Company
The following tables provide a numerical reconciliation of organic sales growth to reported net sales growth:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2025 | Net Sales Growth | | Foreign Exchange Impact | | Acquisition & Divestiture Impact/Other (1) | | Organic Sales Growth |
| Beauty | (2) | % | | 3 | % | | 1 | % | | 2 | % |
| Grooming | (2) | % | | 4 | % | | 1 | % | | 3 | % |
| Health Care | — | % | | 3 | % | | 1 | % | | 4 | % |
| Fabric & Home Care | (3) | % | | 2 | % | | 1 | % | | — | % |
| Baby, Feminine & Family Care | (4) | % | | 2 | % | | 1 | % | | (1) | % |
| Total Company | (2) | % | | 2 | % | | 1 | % | | 1 | % |
(1)Acquisition & Divestiture Impact/Other includes the volume and mix impact of acquisitions and divestitures and rounding impacts necessary to reconcile net sales to organic sales. |
| Nine Months Ended March 31, 2025 | Net Sales Growth | | Foreign Exchange Impact | | Acquisition & Divestiture Impact/Other (1) | | Organic Sales Growth |
| Beauty | (2) | % | | 1 | % | | 2 | % | | 1 | % |
| Grooming | — | % | | 2 | % | | 1 | % | | 3 | % |
| Health Care | 2 | % | | 1 | % | | — | % | | 3 | % |
| Fabric & Home Care | — | % | | 1 | % | | 1 | % | | 2 | % |
| Baby, Feminine & Family Care | (1) | % | | 1 | % | | 1 | % | | 1 | % |
| Total Company | — | % | | 1 | % | | 1 | % | | 2 | % |
(1)Acquisition & Divestiture Impact/Other includes the volume and mix impact of acquisitions and divestitures and rounding impacts necessary to reconcile net sales to organic sales. |
Adjusted free cash flow. Adjusted free cash flow is defined as operating cash flow less capital expenditures and excluding payments for the transitional tax resulting from the U.S. Tax Act. Adjusted free cash flow represents the cash that the Company is able to generate after taking into account planned maintenance and asset expansion. We view adjusted free cash flow as an important measure because it is one factor used in determining the amount of cash available for dividends, share repurchases, acquisitions and other discretionary investments.
The following table provides a numerical reconciliation of adjusted free cash flow ($ millions): | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended March 31, 2025 |
| Operating Cash Flow | | Capital Spending | | U.S. Tax Act Payments | | Adjusted Free Cash Flow |
| $ | 12,832 | | | $ | (2,777) | | | $ | 562 | | | $ | 10,617 | |
Adjusted free cash flow productivity. Adjusted free cash flow productivity is defined as the ratio of adjusted free cash flow to net earnings excluding a non-cash charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina. We view adjusted free cash flow productivity as a useful measure to help investors understand P&G’s ability to generate cash. Adjusted free cash flow productivity is used by management in making operating decisions, in allocating financial resources and for budget planning purposes. This measure is also used in assessing the achievement of management goals for at-risk compensation.
The following table provides a numerical reconciliation of adjusted free cash flow productivity ($ millions): | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended March 31, 2025 |
| Adjusted Free Cash Flow | | Net Earnings | | Adjustments to Net Earnings (1) | | Net Earnings
as Adjusted | | Adjusted Free Cash
Flow Productivity |
| $ | 10,617 | | | $ | 12,439 | | | $ | 752 | | | $ | 13,191 | | | 80 | % |
(1)Adjustments to Net earnings relate to a non-cash charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina. |
Core EPS. Core EPS is a measure of the Company's diluted EPS excluding items that are not judged by management to be part of the Company's sustainable results or trends. Management views this non-GAAP measure as a useful supplemental measure of Company performance over time. This measure is also used in assessing the achievement of management goals for at-risk compensation. The Core earnings measures included in the following reconciliation tables refer to the equivalent GAAP measures adjusted as applicable for the following items:
•Incremental restructuring: The Company has historically had an ongoing level of restructuring activities of approximately $250 - $500 million before tax. In the fiscal year ended June 30, 2024, the Company started a limited market portfolio restructuring of its business operations, primarily in certain Enterprise Markets, including Argentina and Nigeria, to address challenging macroeconomic and fiscal conditions. During the period ended September 30,
The Procter & Gamble Company 27
2024, the Company completed this limited market portfolio restructuring with the substantial liquidation of its operations in Argentina. The adjustment to Core earnings includes the restructuring charges that exceed the normal, recurring level of restructuring charges.
•Intangible asset impairment: In the fiscal year ended June 30, 2024, the Company recognized a non-cash, after-tax impairment charge of $1.0 billion ($1.3 billion before tax) to adjust the carrying value of the Gillette intangible asset acquired as part of the Company's 2005 acquisition of The Gillette Company.
We do not view the above items to be part of our sustainable results, and their exclusion from core earnings measures provides a more comparable measure of year-on-year results. These items are also excluded when evaluating senior management in determining their at-risk compensation.
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THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures |
| Three Months Ended March 31, 2025 | | Three Months Ended March 31, 2024 |
| Amounts in millions except per share amounts | As Reported (GAAP) (1) | | As Reported
(GAAP) | | Incremental Restructuring | | Core
(Non-GAAP) |
| Cost of products sold | $ | 9,694 | | $ | 9,855 | | | $ | (13) | | | $ | 9,842 | |
| Selling, general and administrative expense | 5,524 | | 5,880 | | | 3 | | | 5,883 | |
| Operating income | 4,558 | | 4,460 | | | 10 | | | 4,471 | |
| Income taxes | 868 | | 812 | | | — | | | 812 | |
| Net earnings attributable to P&G | 3,769 | | 3,754 | | | 10 | | | 3,763 | |
| | | | | | | Core EPS |
Diluted net earnings per common share (2) | $ | 1.54 | | $ | 1.52 | | | $ | — | | | $ | 1.52 | |
(1)For the three months ended March 31, 2025, there were no adjustments to or reconciling items for Core EPS. (2)Diluted net earnings per common share are calculated on Net earnings attributable to Procter & Gamble. |
| | | | | | | |
| CHANGE IN CURRENT YEAR REPORTED (GAAP) MEASURES VERSUS PRIOR YEAR NON-GAAP (CORE) MEASURES | | | | | | |
| Core net earnings attributable to P&G | — | % | | | | | | |
| Core EPS | 1 | % | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures |
| | Nine Months Ended March 31, 2025 |
| Amounts in millions except per share amounts | | As Reported (GAAP) | | Incremental Restructuring | | Core
(Non-GAAP) |
| Cost of products sold | | $ | 30,533 | | $ | 20 | | | $ | 30,554 | |
| Selling, general and administrative expense | | 16,765 | | (25) | | | 16,740 | |
| Operating income | | 16,096 | | 5 | | | 16,101 | |
Other non-operating income/(expense), net | | (120) | | 789 | | | 669 | |
| Income taxes | | 3,207 | | (7) | | | 3,199 | |
| Net earnings attributable to P&G | | 12,359 | | 801 | | | 13,160 | |
| | | | | | Core EPS |
Diluted net earnings per common share (1) | | $ | 5.03 | | $ | 0.33 | | | $ | 5.35 | |
(1)Diluted net earnings per common share are calculated on Net earnings attributable to Procter & Gamble. |
| | | | | | |
| CHANGE VERSUS YEAR AGO | | | | | | |
| Core net earnings attributable to P&G | | 3 | % | | | | |
| Core EPS | | 3 | % | | | | |
28 The Procter & Gamble Company
| | | | | | | | | | | | | | | | | | | | | | | | | | |
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures |
| | Nine Months Ended March 31, 2024 |
| Amounts in millions except per share amounts | | As Reported (GAAP) | | Incremental Restructuring | | Intangible Impairment | | Core
(Non-GAAP) |
| Cost of products sold | | $ | 30,500 | | | $ | (25) | | | $ | — | | | $ | 30,475 | |
| Selling, general and administrative expense | | 17,006 | | | (4) | | | — | | | 17,002 | |
| Operating income | | 14,660 | | | 29 | | | 1,341 | | | 16,031 | |
| Income taxes | | 3,061 | | | (20) | | | 315 | | | 3,357 | |
| Net earnings attributable to P&G | | 11,742 | | | 49 | | | 1,026 | | | 12,817 | |
| | | | | | | | Core EPS |
Diluted net earnings per common share (1) | | $ | 4.75 | | | $ | 0.02 | | | $ | 0.42 | | | $ | 5.19 | |
(1)Diluted net earnings per common share are calculated on Net earnings attributable to Procter & Gamble. |
| | | | | |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
There have been no material changes in the Company’s exposure to market risk since June 30, 2024. Additional information can be found in Note 9, Risk Management Activities and Fair Value Measurements, of the Company's Form 10-K for the fiscal year ended June 30, 2024.
| | | | | |
| Item 4. | Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
The Company’s Chairman of the Board, President and Chief Executive Officer, Jon R. Moeller, and the Company’s Chief Financial Officer, Andre Schulten, performed an evaluation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (Exchange Act)) as of the end of the period covered by this report.
Messrs. Moeller and Schulten have concluded that the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed in reports we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (2) accumulated and communicated to our management, including Messrs. Moeller and Schulten, to allow their timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the Company’s fiscal quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
The Company is subject, from time to time, to certain legal proceedings and claims arising out of our business, which cover a wide range of matters, including antitrust and trade regulation, product liability, advertising, contracts, environmental issues, patent and trademark matters, labor and employment matters and tax. In addition, SEC regulations require that we disclose certain environmental proceedings arising under Federal, State or local law when a governmental authority is a party and such proceeding involves potential monetary sanctions that the Company reasonably believes will exceed a certain threshold ($1 million or more).
There were no material changes during the quarter ended March 31, 2025, to our disclosure in Part I, Item 3, “Legal Proceedings” of our Form 10-K for the fiscal year ended June 30, 2024. There were no relevant matters to disclose under this Item for this period.
For information on risk factors, please refer to "Risk Factors" in Part I, Item 1A of the Company's Form 10-K for the fiscal year ended June 30, 2024.
The Procter & Gamble Company 29
| | | | | |
| Item 2. | Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities |
ISSUER PURCHASES OF EQUITY SECURITIES | | | | | | | | | | | | | | | | | | | | | | | |
| Period | Total Number of Shares Purchased (1) | | Average Price Paid per Share (2) | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (3) | | Approximate Dollar Value of Shares That May Yet Be Purchased Under Our Share Repurchase Program |
| 1/01/2025 - 1/31/2025 | — | | | $ | — | | | — | | | (3) |
| 2/01/2025 - 2/28/2025 | 4,152,570 | | | 168.57 | | 4,152,570 | | | (3) |
| 3/01/2025 - 3/31/2025 | 3,812,329 | | | 170.50 | | | 3,812,329 | | | (3) |
| Total | 7,964,899 | | | $169.49 | | 7,964,899 | | | (3) |
(1)All transactions are reported on a trade date basis and were made in the open market with large financial institutions. This table excludes shares withheld from employees to satisfy tax withholding requirements on option exercises and other equity-based transactions. The Company administers cashless exercises through an independent third party and does not repurchase stock in connection with cashless exercises.
(2)Average price paid per share for open market transactions excludes commission.
(3)In accordance with the repurchase program announced on July 30, 2024, the Company reaffirmed in its earnings release on April 24, 2025, that it expects to reduce outstanding shares through direct share repurchases at a value of $6 to $7 billion in fiscal year 2025, notwithstanding any purchases under the Company's compensation and benefit plans. Purchases may be made in the open market and/or private transactions and purchases may be increased, decreased or discontinued at any time without prior notice. The share repurchases are authorized pursuant to a resolution issued by the Company's Board of Directors and are expected to be financed by a combination of operating cash flows and issuance of debt.
During the three months ended March 31, 2025, none of our directors or officers or a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" as defined in Item 408 of Regulation S-K.
Amounts in millions of dollars unless otherwise specified.
30 The Procter & Gamble Company
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101.SCH (1) | | Inline XBRL Taxonomy Extension Schema Document |
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101.CAL (1) | | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| | |
101.DEF (1) | | Inline XBRL Taxonomy Definition Linkbase Document |
| | |
101.LAB (1) | | Inline XBRL Taxonomy Extension Label Linkbase Document |
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101.PRE (1) | | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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| 104 | | | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) |
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| * | Compensatory plan or arrangement |
| |
| + | Filed herewith |
| |
(1) | Pursuant to Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Sections 11 or 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections. |
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | | | | | | | | | | | | |
| | | | |
| | | | THE PROCTER & GAMBLE COMPANY |
| | | | |
| April 24, 2025 | | | | /s/ MATTHEW W. JANZARUK |
| Date | | | | (Matthew W. Janzaruk) |
| | | | Senior Vice President - Chief Accounting Officer
(Principal Accounting Officer) |
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