PROCTER & GAMBLE Co Q2 FY2025 earnings call

• Second quarter results largely in-line with expectations despite volatility, with organic sales growth, EPS growth, and strong cash return.
• 26 consecutive quarters of 2%+ organic sales growth and 8.5 fiscal years of 2%+ core EPS growth.
• Focus on integrated strategy with superiority across five vectors, strong innovation plans. Examples include Charmin smooth tear, Old Spice/Secret deodorant sprays, Dawn Powerwash, Swiffer PowerMob, Oral-B iO toothbrushes, etc.
• Productivity improvement with business units building three-year cost-savings master plans, and constructive disruption to drive margin expansion and competitive advantage.

Second quarter organic sales grew 3%, with volume contributing 2 points, mix 1 point, and pricing in-line. Family Care saw double-digit growth; Home Care and Skin and Personal Care had mid-singles growth. Personal healthcare, Hair Care, etc., grew low-single digits; Baby Care declined low singles. Focus markets organic sales grew 4%, enterprise markets in-line. North America organic sales grew 4% driven by volume, with broad market share growth. Europe focused markets organic sales up 4% via volume. Latin-America and European enterprise markets grew low single digits; Asia, Middle-East and Africa declined, with Greater China organic sales down 3% but improving from prior quarter, SK-II in Greater China grew 5%.

• Organic sales growth guidance remains 3%-5% for fiscal 2025. Core EPS growth guidance is 5%-7%.
• FX headwinds and commodity costs add $0.10-$0.12 to core EPS headwinds.
• Expect adjusted free-cash flow productivity of 90%, plan to return $16B-$17B to shareholders via dividends and share repurchases.

• Volatile input costs, currencies, consumer, competitor, retailer, and geopolitical dynamics.
• Significant currency weakness, commodity cost increases, geopolitical disruptions, major supply-chain disruptions, or store closures could impact guidance.

Q: Approach to offset FX pressures and SK-II performance?

A: Price for foreign-exchange in enterprise markets with innovation, SK-II improving due to brand building, innovation, and increased Chinese travel.

Q: Beauty segment in US and China?

A: Beauty has strength in APDO, personal care, Hair Care, but opportunity in skincare; China beauty volume improving but challenges remain.

Q: Pricing scenario and mix driving?

A: Pricing consistent with innovation, mix driven by trade-up within categories, positively impacting top-line and slightly negatively affecting gross margin.

Q: Retailer conversations and inventory?

A: Conversations focused on market growth, supply-chain optimization, with retailers cautious but normalizing inventory.