The Procter & Gamble Company (PG) 2024 Q4 Earnings Call Summary

Optimistic Highlights

• Strong Fiscal Year Performance: P&G exceeded guidance ranges for organic sales growth, core EPS growth, cash productivity, and cash return to shareholders despite market headwinds.
• Broad-Based Organic Sales Growth: Achieved 4% organic sales growth for the fiscal year, with significant contributions across various product categories and regions.
• E-commerce Sales Increase: E-commerce sales grew by 9%, now representing 18% of the total company sales.
• Core Earnings Per Share Growth: Core EPS was $6.59, up 12% for the year, with core gross margin improving by 360 basis points.
• Dividend Increase and Share Repurchase: Increased dividend by 7% and returned over $14 billion to shareholders through dividends and share repurchases.

Pessimistic Highlights

• Greater China Sales Decline: Organic sales in Greater China were down 9%, affected by soft market conditions and brand-specific challenges with SK-II.
• Market Share Challenges: Global aggregate market share was down 30 basis points, with some regions and categories facing competitive pressures.
• Argentina Divestiture: Divested operations in Argentina, which will impact organic sales reporting in fiscal year ’25.

Company Outlook

• Fiscal Year ’25 Guidance: Expects organic sales growth of 3% to 5%, core EPS growth of 5% to 7%, and adjusted free cash flow productivity of 90%. Anticipates continued volatility and challenges but remains confident in the integrated strategy to drive market growth.
• Commodity Cost and Foreign Exchange Headwinds: Projects a headwind of approximately $300 million from commodity costs and $200 million from foreign exchange, impacting fiscal year ’25 performance.

Q & A Highlights

• Q: Can you touch on organic sales coming in slower than expected, especially in the fourth quarter? (Bryan Spillane, Bank of America)

  A: Eighty-five percent of the business is performing as expected, with strong growth in North America and Europe. Challenges in China and the Middle East have impacted results, but the structural elements of the business are strong. (Andre Schulten)

• Q: How do you see the balance between pricing and volume in your fiscal ’25 organic sales growth guidance? (Dara Mohsenian, Morgan Stanley)

  A: Expect a broadly balanced contribution from volume and price mix, with market growth rates of 3% to 4%. Margin perspective remains strong with continued investment in the business. (Andre Schulten)

• Q: Could you discuss the performance and outlook for fabric and home care, and baby and family care segments? (Steve Powers, Deutsche Bank)

  A: Home care is performing well, with challenges in fabric care due to competitive pricing and high base comps. Baby care is seeing momentum in premium products, with innovation expected to drive improvement. (Andre Schulten)

• Q: Can you provide perspective on the consumer environment, particularly in the U.S. and Western Europe? (Lauren Lieberman, Barclays)

  A: Not seeing significant consumer pressure as indicated by stable private label shares and consistent volume growth. Remain encouraged by the market growth rates and consumer responsiveness to innovation. (Jon Moeller)

• Q: How are you factoring in a potential rebound in China and the Middle East into your guidance? (Robert Ottenstein, Evercore ISI)

  A: Guidance assumes annualization of current headwinds with no significant improvement or worsening expected. The upper end of the guidance range may assume some level of improvement. (Andre Schulten)