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.