Proctor and Gamble Quarter End Conference Call Summary

Jun 26, 2024

Proctor and Gamble's Quarter End Conference Call - Summary

Key Participants

  • Andre Shulton, Chief Financial Officer
  • John Chevalier, Sr. VP, Investor Relations

Opening Remarks

  • Discussion includes forward-looking statements (refer to recent reports for potential factors affecting results).
  • Usage of non-GAAP financial measures; reconciliations available on the investor relations website.

First Quarter Performance Highlights

  • Organic Sales: Grew 7%
    • Pricing added 7 points to sales growth (1 point contributed by volume).
  • **Regional Performance: Broad-based across geographies: **
    • North America: Organic sales up 7%
    • Europe Focus: Up 15%
    • Greater China: Down 6%
    • Latin America: Up 19%
    • European Enterprise: Up 15%
  • Category Performance: Broad-based growth
    • Home Care grew low-teens
    • Personal Health Care up double digits
    • Feminine Care, Oral Care, Fabric Care, Hair Care, Grooming up high single digits
    • Baby Care, Family Care up mid-singles
    • Skin and Personal Care grew low-singles
  • **Market Share: **
    • Global aggregate value share up 40 basis points vs. prior year
    • U.S. value share up 50 basis points vs. prior year
    • European Focus market value share up 40 basis points
  • **Financial Performance: **
    • Core earnings per share (EPS) increased to $1.83
    • Core operating margin increased by 240 basis points
    • Adjusted cash flow productivity at 97%
    • Cash returned to shareholders: $3.8 billion

Strategic Focus Areas

  1. Superior Market Execution: Driving sales and profitability through integrated strategies, portfolio superiority, and productivity improvements.
  2. **Reinvestment in Growth: **
    • Investments in product innovation, marketing, media spending, and supply resilience.
  3. **Global Market Trends: **
    • Ongoing Volatility: Commodity costs, currency rates, consumer dynamics.
    • Emphasis on sustainable top and bottom line growth.
  4. Geographical Focus: Addressing specific market challenges (e.g., Greater China’s weak consumer confidence), while leveraging strong performance areas.

Specific Regional Points

  • **China: **
    • Market contraction noted; recovery expected in long-term with a growing middle-income consumer base.
  • **Europe: **
    • Private label growth noted but managed with portfolio superiority and strong brand execution.
  • **U.S: **
    • Strong volume and value share growth led by innovation and in-store execution.
  • **Latin America: **
    • Extremely strong performance due to doubled-down superiority, managing currency impacts effectively.

Performance & Guidance Outlook

  • Overall Year Outlook: Targeting towards higher end of fiscal year guidance for organic sales growth, core earnings, and cash return.
  • Second Quarter & Beyond: Anticipate tapering pricing benefits, re-investment strategies, and adapting to potential economic uncertainties.
  • Long-Term Goals: Maintaining balanced growth and agility in investment strategies, focusing on market growth, productivity, and constructive disruption.
  • Expected Financial Impact: Commodity cost relief ($800 million tailwind), major currency headwinds ($1 billion after-tax impact), higher inflation in wages/benefits.
  • Cash Plans: $14-$15 billion return to shareholders expected this fiscal year.

Q&A Highlights

  • China: Soft market dynamics but long-term opportunity remains. Caps on Luxury segment can impact (e.g., sk2).
  • Europe: Promotion activity still below pre-Covid levels, managing currency impact effectively.
  • Volume Growth: Encouraged by trends in U.S., Europe, and Latin America.
  • Reinvestment: Priority on market growth, media, and product superiority. Investment responsive to ROI dynamics.
  • Consumer and Economic Landscape: Resilient consumers; stable consumption levels. Limited expectation of significant trade-down.

Final Remarks

  • Confident in strategy and growth model; committed to delivering balanced top and bottom-line growth.
  • Open for further questions as needed.