PG | Q1 2025
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Overview
Non-GAAP EPS of $1.93 beats by $0.03.
Revenue of $21.74B (-0.6% Y/Y) misses by $240M.
Takeaways
Procter & Gamble’s (PG) Q1 2025 earnings call, led by CFO Andre Schulten, told a tale of modest yet stable growth despite a challenging global economic environment.
Notably, eight of PG’s ten product categories either grew or maintained their organic sales, with mid-single-digit growth in family care, home care, and personal healthcare. Hair care, oral care, and other categories saw low single-digit growth, while baby care and skin and personal care faced declines in the mid-single digits.
Geographically, North America remained a stronghold, with organic sales up 4%, supported by volume growth over the past five quarters. Europe also posted 3% growth for the quarter.
On the other hand, PG faced challenges in Greater China, where organic sales dropped by 15% as market conditions worsened, particularly for the SK-II brand. Schulten noted that it could take a few more quarters for PG to regain growth in China.
Similarly, the Asia-Pacific, Middle East, and Africa regions saw declines in organic sales by low single digits. Latin America’s growth was relatively modest though, with a low single-digit increase.
Regarding profitability, PG’s EPS rose by 5% to $1.93, and operating margins grew by 30 basis points. Cash flow remained healthy too, with 82% free cash flow productivity, and the company returned $4.4 billion to shareholders through dividends and share buybacks.
During the Q&A session, Schulten emphasized the resilience of PG’s core categories—daily-use consumer products such as hair care, dental care, and laundry supplies—that remain essential even in tough economic climates.
Schulten explained that consumers value the reliability and quality of PG’s products, and tend to trade up within the company’s portfolio for higher-performing options, which further supports the company’s growth trajectory.
One area of focus on the call was PG’s family care business, where Schulten discussed the company’s ongoing efforts to innovate in product design, such as improving substrates for Bounty and Charmin, which results in larger rolls and more product value for consumers. This continuous innovation has been central to the long-term success of the family care category and is expected to continue driving growth.
Despite the challenges in baby care, particularly with declining birth rates, Schulten pointed out that PG’s strategy has shifted towards providing higher-tier products with superior benefits, rather than relying on volume growth. This approach has seen success in markets like China, even amidst declining birth rates.
However, Schulten acknowledged that innovation in mid-tier products, particularly in North America and Europe, remains an opportunity for future growth.
Overall, Schulten concluded the call by reaffirming PG’s solid top-line performance across 85% of its business, along with stable earnings and cash results, keeping the company on track to meet its fiscal year targets.