The operator of the conference call welcomes everyone and reminds them that the discussion will include forward-looking statements and references to non-GAAP financial measures. The CFO, Andre Schulten, gives an overview of the company's strong results for fiscal year '24 and the fourth quarter, with organic sales growth, core EPS growth, cash productivity, and cash return all meeting or exceeding expectations. The CEO, Jon Moeller, will add perspective on the company's strategic focus areas and capabilities and provide guidance for fiscal year '25. Despite market headwinds, the company saw broad-based growth in eight out of ten product categories.

In the second paragraph, the article discusses the performance of various product categories for P&G in the fiscal year. Home care, hair care, and grooming saw high single digit growth, while oral care and feminine care saw mid-single digit growth. Fabric care, family care, and personal healthcare had low single digit growth, while skin and personal care and baby care saw a decline. The company's focus markets grew by 4%, with North America and Europe seeing the highest growth. However, Greater China saw a decline due to market conditions and brand-specific challenges. Ecommerce sales increased and contributed to the company's overall growth. P&G's strategy of driving market growth led to share growth and increased global aggregate value share. The company saw an increase in core earnings per share and improved margins. They also increased their dividend and returned value to shareholders. In the fourth quarter, organic sales were up 2%, with volume and pricing showing positive growth.

In the third quarter, P&G experienced broad-based growth across product categories and regions. Nine out of ten categories saw growth or maintained sales, with high single-digit growth in home care, hair care, grooming, and oral care. Five out of seven regions also saw organic sales growth, with a 4% increase in North America and 8% increase in Latin America. However, organic sales in Greater China declined by 8% due to weak market conditions and brand-specific challenges for SK-II.

The article discusses the current state of the market and expectations for improvement in the future. Despite soft volume trends in certain regions, the company expects these to moderate in the coming periods. Core earnings per share saw a 2% increase and strong productivity improvements. The company also returned a significant amount of cash to shareholders. Overall, the company has consistently met or exceeded its targets in recent years.

The company has shown strong earnings growth and improved operating margins over the past six years, with a significant amount of cash returned to shareholders. Despite a volatile environment, they were able to meet their sales and EPS guidance, with strong volume growth in certain regions. The company plans to continue focusing on superiority, productivity, and execution to drive growth and value creation. Their strategy is adaptable and focused on creating rather than taking business, with a portfolio of daily use products and active management.

The company has made adjustments to its portfolio and operating model in order to focus on long-term growth and value creation. Their second strategy involves investing in innovation across all aspects of their business and leveraging this superiority to delight consumers and grow their share in the market. This approach has already proven successful with products like Tide and Ariel pods and Oral B IO power toothbrushes. These innovations have driven market growth, share growth, and sales growth for the company.

Native, a premium personal care brand, has achieved superiority in all five vectors and multiple product forms. This includes deodorants, body wash, shampoo, and conditioners, with superior performance, fewer ingredients, and irresistible scents. The brand has also focused on transparent labeling and clean packaging, strong retail partnerships, and a premium positioning in the market. This has resulted in a significant increase in market value growth for the deodorants and personal care categories. The company's third strategy element is to improve productivity in all areas of operations, in order to fund investments and generate cash. They have already achieved strong cost savings and have identified potential for even more savings through platform programs and partnerships with retailers. They are also using data and digital tools to optimize supply chains and marketing, with a potential for $200-300 million in savings.

The company is focused on increasing efficiency and effectiveness by digitizing operations, disrupting traditional models, and creating an empowered and diverse organization. They are also working on supply chain 3.0 to improve productivity, agility, and sustainability. The company is committed to environmental sustainability and creating superior products for consumers, customers, and shareholders.

The company's focus is on driving sales and profitability while reducing their environmental impact, leveraging digital technology to improve operations and innovation, and creating a superior value proposition for employees. These four focus areas work together to strengthen their integrated growth strategy, with a commitment to delivering superior products and increasing productivity.

The company remains confident in their strategy and ability to drive growth and create value for consumers, customers, employees, and shareholders. They acknowledge challenges but believe in their capabilities and opportunities for growth. The guidance for fiscal year 2025 includes modest organic sales growth and mid to high single digit core earnings per share growth.

The company's outlook for fiscal year '25 includes a $300 million after-tax headwind from commodity costs and a $200 million after-tax headwind from foreign exchange. This is expected to result in a 3% drag on core EPS growth. The company also expects to pay dividends of $10 billion and repurchase $6-7 billion of common stock. The guidance is consistent with the company's long term algorithm, but it is important to consider the difficult comp for the first quarter and the impact of foreign exchange and commodity headwinds. The outlook is based on current market growth, commodity prices, and foreign exchange rates, and significant disruptions or closures are not anticipated within the guidance ranges.

The speaker, Jon Moeller, hands the floor back to Jon for his closing thoughts. Moeller expresses satisfaction with the company's strong results in a challenging environment and believes that their strategy and execution will lead to sustainable growth and value creation. He emphasizes the importance of delivering superior products to consumers and retail partners. The first question from Bryan Spillane of Bank of America is about the slower than expected organic sales in the last few quarters. Moeller and Andre Schulten respond by stating that the company exceeded their guidance metrics for the year, but the sales were not linear and there were two different parts of the business.

The business is performing as expected, with strong growth in North America and Europe. However, there are some headwinds impacting the top line results, such as slower recovery in China, ongoing issues in the Middle East, and a softening in Argentina. Despite these challenges, the overall performance of the business is strong and the company is well-positioned for future growth.

The business is growing as expected with increased share in North America and volume growth in other markets. Gross margin is at record levels and productivity is strong, allowing for continued investment in media and innovation. However, headwinds experienced in the second half of the previous fiscal year will continue to impact the first half of the current fiscal year. The company is confident in meeting their guidance metrics and has seen a re-acceleration in volume growth. The question of whether this can happen while also achieving margin expansion has been answered with a resounding yes.

The speaker discusses the positive financial performance of the company, including increased margins and volume growth. They also mention plans for innovation and the strength of their brands. The following question asks for more information on the balance between pricing and volume in their forecast for fiscal year 2025.

The speaker is asking about the company's projections for category growth and earnings flexibility in the upcoming year. He wants to know if the company has good visibility on the 3% to 4% category growth assumption, and how they are thinking about earnings relative to top line growth given some volatility. The speaker also mentions the company's increased investments in marketing and strong productivity results. The other speaker responds by saying that the volume and price mix contribution is expected to be balanced, with half of the market growth driven by volume and the other half by price mix. He also mentions that the company has chosen to continue investing in the business and has seen strong results in North America and Europe.

The speaker discusses the company's disciplined approach to investments and plans to re-evaluate their effectiveness. They mention strong productivity and maintaining investment in marketing and innovation. Another speaker adds that the return on investments may take time to see and emphasizes the company's consistent growth in recent years. They feel confident about their plans but continue to reassess them. A question from an analyst is then mentioned.

The speaker discusses the performance of the fabric and home segments, noting that home care is doing well but fabric care is facing challenges due to high base comparisons in Europe. They expect the business to re-accelerate quickly and are launching a spring innovation bundle in North America to support it.

The business is gaining momentum and growing share in North America, with encouraging innovation in the fabric care sector. In China, they have chosen to focus on the most profitable part of the business, which may have short term implications. In North America, the premium end of the baby care business is doing well, with expected acceleration in the mid-tier brand due to new innovation. In Europe, there is a need for strong communication and innovation to compete with private label brands. The team is closely monitoring sufficiency of innovation.

The company is seeing strong progress in certain categories and sectors, such as beauty, despite challenges in SK-II and China. The personal care side of the business is also doing well. The company does not see the same consumer pressure that other companies are reporting, as private label shares are not increasing.

The private label shares in North America and Europe have remained consistent with pre-COVID levels and there is no significant decline in unit growth. The company's products are performing well in the market and there is no noticeable consumer-driven impact. The market growth rates also support this, with consistent volume and value growth in both the US and Europe. The company is closely monitoring the situation, but so far there is no evidence of decreased consumption in their categories. Additionally, their new innovation, Oral B IO, is performing well and experiencing double digit growth.

The speaker talks about the company's recent success in building two share points and their responsiveness to innovation. They also mention strong performance in enterprise markets, with growth of 6%. However, there have been some headwinds in the Middle East and the divestment of their Argentina business will not affect their organic sales base. The company's assumptions for the future include a rebound in China and the Middle East, which is factored into their guidance range.

The company expects some level of improvement in their sales range, but the main contribution to the midpoint of the range will come from the normalization and annualization of headwinds such as China, SK-II, the Middle East, and Argentina. The company is not assuming that these factors will worsen, but they are centered on a realistic expectation. In terms of pricing, the company has seen positive contributions from pricing and mix for 19 years.

The speaker expects the current year to have foreign exchange headwinds in some enterprise markets, as well as innovation-based pricing and trade-up opportunities. They also anticipate stability in the promotion environment. The speaker mentions that the market will likely be half price-mix driven and half volume-driven, with a similar model to the previous 19 years. In response to a question about commodity outlook, the speaker mentions a $300 million headwind expected in fiscal '25, primarily driven by pulp. They also note that the rest of the commodity portfolio is currently stable, but this may change throughout the year.

The company discusses the impact of the commodity crisis on their P&L and notes that it takes 3-9 months for the effects to flow through. Transportation is relatively stable, with some minor impact from increased sea routes. The company also addresses concerns about potential consumer pressure and explains that their 3-4% category growth assumption is a global number, making it difficult to deconstruct by region.

The company expects a slowdown in business in certain regions due to a decrease in price mix and an increase in volume. The beauty segment has been affected by challenges in China, but excluding SK-II, the business has shown growth potential. Brands such as Head & Shoulders, Pantene, Herbal Essences, Old Spice, Secret, and Native have all shown double digit growth, with Native reaching $700 million in sales. The company is also seeing strength in their new brands.

The North America and global hair care markets have seen growth, while the personal care business is doing well. The company expects to see annualization in China, particularly in the Olay and SK-II businesses. The company plays in more foundational beauty segments and has seen strong growth in these areas. The company is seeing slower results in China, potentially due to macroeconomic factors. The SK-II business has been well-covered, but the company is also seeing growth in other areas. The company expects to see improved outcomes in the second half of the year due to annualization.

The speaker addresses the question about the impact of China on the company's growth, stating that they expect it to eventually stabilize at mid-single-digit growth. They mention that the effects of COVID on the SK-II brand have already stabilized, and they are confident in the annualization of sales. They also highlight their success in the tough baby care market due to their specific portfolio and innovation tailored to Chinese consumers. The speaker also mentions growth in the Braun and fabric care categories through focused innovation and profitability. Overall, the company is working on expanding their success to other categories in China.

P&G's largest business in China is hair care, and they have strong plans and execution in place for Pantene and Head & Shoulders. They have chosen to exit the third brand, Vidal Sassoon, and are still working on plans for Rejoice. The company's investment levels in trade spending and advertising and marketing have increased, with gross margin expansion being supportive. This is in line with their competitor's strategy in the oral care segment. P&G saw a 200 basis point increase in advertising and marketing this year, with a 300 basis point increase in the quarter, and they also mentioned the success of their fabric care segment.

The speaker is satisfied with the top line payback in the markets where they can accurately measure it, such as Europe, Latin America, and North America. They are focused on ensuring that their spending is productive and driving growth in sales and market share. They are pleased to see an increase in media spending, as it helps consumers understand the category better and drive penetration. The promotion environment is still productive, and as long as volume and value growth are sustained, they believe they are in a good place.

The company is focused on innovation and superiority, and is increasing advertising reach to make more consumers aware of their products. This effort takes time to see results, but the company is not interested in wasting money. When it comes to promotions, the company is responding to both competitors' innovation and tougher macros, but still prioritizes value in their products.

The competitive environment for promotion is stable in Europe and North America. The company's focus is on creating superiority in the market to attract new consumers and increase usage. This applies to all tiers and channels they compete in. The recent Luvs innovation is an example of this strategy in action.

Moeller discusses the potential impact of a consumer downturn on P&G's innovation strategy, using examples such as Luvs and hand dishwashing products. He also mentions the success of their innovations in paper products, such as Charmin's easy tear scallop perforation. Moeller emphasizes that P&G is committed to innovation in all categories, including hand wash, which is seen as a potentially more relevant category during a consumer downturn. The next question from Mark Astrachan is about SK-II and its role in P&G's portfolio.

The speaker is responding to a question about the slower improvement of their brand in China compared to their peers. They mention that their brand portfolio is strong and they have made the right choices, such as divesting Vidal Sassoon and trimming their fabric care portfolio. They also mention the challenge of a channel shift in China.

The speaker explains that the company's footprint in China has shifted from brick and mortar to online, specifically through the platform Douyin. They are currently in the process of transitioning their portfolio to find the right balance between physical and online sales, and they expect this to lead to sustained growth and value creation in China. The next question is about the direction of consumer trends in North America for the first half of the year, and the speaker suggests that the price mix neutralization will continue through the first half, with stable volume.

The market is expected to continue growing at a rate of 2% with a decrease in price mix. The company's objective is to stay within this range, but there may be variability due to different factors. The Olympics sponsorship is primarily seen as a brand building opportunity and there will be activation closer to the region of the event. There will be significant activation in Europe, and the company will be meeting with retail partner CEOs to plan for both during and after the event.

The speaker discusses the success of the company's strategy in the long term, despite challenges such as COVID, inflation, and geopolitical struggles. They have added $17 billion in sales and $5 billion in profit in the past six years, putting them in the 88th and 93rd percentile of the S&P 500, respectively. The company has also created over $200 billion in market cap, which is more than most of their competitors have created in their entire history. The speaker believes this success is worth reflecting on as they move forward.

The company is currently in a strong position to execute their strategy, which includes investing in innovation, increasing superiority, improving productivity, and resuming volume growth. They believe that regardless of the economic environment, their approach of focusing on daily use categories, delighting consumers, and having a more agile organization structure is the right path forward. While there may be fluctuations in their results, the company is confident that their strategy will continue to produce positive results.

The speaker acknowledges the challenges they have faced in the past and will face in the first half of next year, but believes they are not as significant in the long term. They thank the audience and end the conference call.

This summary was generated with AI and may contain some inaccuracies.