PG | Q4 2025

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Overview

• Non-GAAP EPS of $1.48 beats by $0.06.

• Revenue of $20.89B (+1.8% Y/Y) beats by $40M.

Takeaways

Procter & Gamble (PG) finished fiscal 2025 with solid results in a difficult environment—and also announced a big leadership change.

After nearly four decades at the company, CEO Jon Moeller is stepping into the role of Executive Chairman starting January 1, 2026. COO Shailesh Jejurikar will take over as CEO. The transition has been in the works for a while, and leadership emphasized that Shailesh is more than ready, having run major parts of the business across geographies and categories over his 36-year career with the company.

Looking at the numbers, PG grew organic sales 2% for the year, with half of that coming from volume and the other half from pricing and mix. Core EPS came in at $6.83, up 4% from last year.

Margins were a mixed bag—gross margin dipped a bit, but operating margin improved thanks to nearly $2.7 billion in cost savings. Free cash flow productivity hit 87%, and the company returned $16 billion to shareholders through dividends and buybacks.

The fourth quarter followed a similar trend: 2% organic sales growth, 6% EPS growth, and strong execution that helped offset currency and cost headwinds.

Most categories held up well—nine out of ten actually grew for the year and the quarter, with Baby Care being the lone exception. E-commerce grew 12% and now makes up 19% of total sales.

Greater China returned to growth in the back half of the year, which management presented as a good sign even though the recovery is still on thin ice. Latin America also stood out, especially Mexico, while Brazil was hurt by inventory cuts.

As should be expected, a big focus of the call was the broader macro environment. Higher tariffs, inflation, geopolitical uncertainty, and shaky consumer sentiment are making it harder to predict what’s coming next.

PG acknowledged that and gave wider guidance ranges for FY26 than usual. They’re calling for 0–4% organic sales growth and 0–4% EPS growth. That includes a $1 billion hit from tariffs, mostly tied to products moving between the U.S., China, Canada, and other global suppliers. The company expects to offset some of that through productivity, flexible sourcing, and price increases (with innovation attached), but they’re staying cautious.

On the topic of tariffs, about 25% of PG’s U.S. SKUs are affected, and price increases in the mid-single digits are already rolling out in some categories. Still, they’re being careful to pair those increases with product upgrades so that consumers still feel like they’re getting value.

Management was clear that if tariffs go away, prices may have to come down—so they aren’t counting on tariff relief as a tailwind. We’ll see if that actually ends up being the case.

Overall, though, PG’s core strategy isn’t changing. They still believes that long-term success comes from categories where performance matters, backed by products that are clearly better than the alternatives.

Innovation remains at the heart of the plan, and they gave a long list of examples to prove it: Pampers and SK-II are gaining traction in China, Pantene’s new treatment line is growing fast in Mexico, and Tide evo (a waterless detergent in a recyclable package) is exceeding early expectations.

With that, Swiffer’s PowerMop launch became the biggest in the brand’s history, thanks in part to viral campaigns tested with AI and influencers. The company had five of the top 25 new product launches in 2024, more than any of its major peers combined.

On the call, analysts asked a lot of questions about why PG’s outperformance versus the broader market has narrowed recently, especially in North America. Management admitted that in some categories, they’ve fallen behind on superiority and need to catch up. Whether it’s bringing more innovation to lower-priced tiers (like Luvs in Baby Care) or launching new products that expand the market (like the upcoming expansion of Tide evo), it sounds like they’re working on it.

There were also questions about consumer behavior at large—why shoppers are slowing down, what it means for growth, and how PG is adjusting. The short version is that people aren’t cutting out essentials like laundry detergent or diapers, but they are being more selective and cautious.

PG is trying to meet them where they need to be met by offering a full pricing ladder across categories and delivering clear value at every level. They also made it clear that they won’t chase competitors into a promo war just to protect short-term share if it means shrinking the category.

Looking at the big picture, the overall tone of the call sounded aware and proactive. Moeller described PG’s situation as one full of both challenges and opportunities—and said the innovation pipeline and leadership transition are all about putting the company in the best possible position for long-term success.

For now, there’s still plenty of uncertainty, but the team seems confident they can navigate whatever comes next. After all, this isn’t their first rodeo.

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