The opening paragraph of Procter & Gamble's quarter-end conference call introduces the participants and discusses the nature of the meeting, including the mention of forward-looking statements and non-GAAP financial measures, with references available on their Investor Relations website. The call is led by CFO Andre Schulten, joined by Chairman and CEO Jon Moeller and SVP of Investor Relations John Chevalier. Schulten provides an overview of second-quarter results, indicating they met expectations despite volatility. The quarter saw 3% organic sales growth, driven by volume and mix, while pricing remained consistent with the prior year. The results were unexpectedly positive, considering challenges like a two-week system outage, and they successfully supported customer orders ahead of January events.

The paragraph outlines the company's broad-based growth in organic sales across most product categories and regions for the quarter. Notably, nine of ten product categories saw sales growth, with standout performances in Family Care, Home Care, and Skin and Personal Care. Organic sales in North America and Europe grew by 4%, each driven by volume increases, while Latin America and European enterprise markets saw low single-digit growth. The Asia, Middle-East, and Africa region experienced a slight decline, with Greater China's sales dropping 3%, though improving from a 15% decline the previous quarter. SK-II in Greater China showed solid growth. Overall, market share remained stable, and core earnings per share rose by 2%, or 3% on a currency neutral basis.

In the third paragraph, the company reports managing incremental transportation costs, resulting in a slight decline in core gross and operating margins. Despite these challenges, there was a significant productivity improvement and a high adjusted free-cash flow productivity of 84%. The company returned over $4.9 billion to shareholders through dividends and share repurchases. While acknowledging a challenging economic and geopolitical environment, the summary highlights strong organic sales and EPS growth. Jon Moeller commends the team's consistent execution over the past 6.5 years, achieving organic sales growth and core EPS growth through various challenges. Although first-half results fell below expectations, there is optimism for stronger performance in the second half, with further guidance updates from Andre expected.

The paragraph discusses the company's commitment to an integrated strategy that supports growth and value-creation, emphasizing disciplined portfolio choices for US dollar-based returns. The strategy focuses on superiority across five vectors, leveraging recent innovations to boost market presence. Examples include the successful launch of Charmin smooth tear toilet paper, which has increased market share, and expansions in the deodorant sector with Old Spice, Secret, and Native brands. Dawn Powerwash and Swiffer PowerMob have also significantly increased their market share. The company is introducing advanced Oral-B iO toothbrushes, with promising early results in the US, and plans to expand globally.

The paragraph highlights recent product launches and developments by the company, including the new Crest 3D White Deep Stain Remover toothpaste and Tide Oxi Boost power pods, both of which have received positive responses. The company is also expanding its Zevo insect control line and continuing to test and prepare for broader distribution of Tied EVO laundry detergent. Across its brands, the company is focused on driving innovation, improving productivity, and implementing cost-saving measures to fuel growth and margin expansion. They emphasize success in consumer ratings and reviews, and have multi-year plans for continued improvements and innovations.

The paragraph discusses P&G's commitment to continuous innovation and adaptability within its industry. The company emphasizes an integrated strategy that empowers its employees and focuses on valuable business outcomes. P&G aims to drive growth by creating new trends and technologies, rather than just competing for existing market share. The strategy adapts to changing consumer, customer, and societal needs. Despite acknowledging a volatile external environment, P&G maintains its fiscal 2025 performance targets, anticipating organic sales growth between 3% to 5%, slightly ahead of the market growth expected to be 3% to 4%. The company remains optimistic about balancing top and bottom-line growth.

The paragraph outlines the company's financial guidance for fiscal 2025, expecting core EPS growth of 5% to 7% compared to fiscal 2024, translating to $6.91 to $7.05 per share. The company anticipates significant headwinds from commodity costs ($0.08 per share) and foreign exchange rates ($0.12 per share), along with lower non-operating income and a higher tax rate, adding a total headwind of $0.10 to $0.12 per share. Given softer market growth and exchange rate challenges, it expects to hit the lower end of its guidance. Despite these challenges, the company aims for a 90% adjusted free-cash flow productivity, plans to return $16 billion to $17 billion in dividends and stock buybacks to shareholders, and emphasizes potential risks such as currency fluctuations, commodity cost increases, geopolitical issues, and supply-chain disruptions not accounted for in the guidance.

In the paragraph, Jon Moeller from P&G expresses satisfaction with the company's performance amid challenging conditions and anticipates a stronger outlook for the latter half of the year. He mentions the focus on executing a strategy that promotes balanced growth and value creation. During the Q&A, Dara Mohsenian from Morgan Stanley asks about short-term organic sales growth and specifically about the performance split between the robust 85% of business in regions like the US, Europe, and Latin America, and the lagging 15% in other regions. Andre Schulten responds, explaining that the 85% continues to grow around 4%, with an improvement noted in the 15%, especially in Greater China and other markets like Asia, the Middle East, and Africa.

The paragraph discusses the financial performance and future expectations for a company, presumably Procter & Gamble, with a focus on various global regions. It highlights that China's organic sales were down 15% in the first quarter but improved to a 3% decline in the second quarter, indicating positive recovery momentum. The company expects continued growth in North America and improved performance in Europe and Latin America as comparison bases become easier. They are aiming for mid to high organic sales growth if recovery trends hold, but potential weakening in North America, Europe, or a regression in China could push results to the lower end of projections. The base case is a continued strong performance at around 4% growth in 85% of the business and ongoing recovery in the remaining 15%. The paragraph concludes with Lauren Lieberman from Barclays asking about consumer behavior, particularly in the US and Europe, rather than just performance metrics.

The paragraph discusses the stability and growth of the consumer market in both Europe and the US for nondiscretionary, performance-focused categories. In Europe, market growth is around 4% in focus markets and in double digits in enterprise markets, with the company gaining volume share. Inflation has decreased to about 2%, creating a stable environment, and the company plans to invest in innovation to capitalize on this. In the US, the market has experienced volatility due to factors like hurricanes and port strikes, but overall, the situation is stable with market growth around 4% and volume growth around 3%. The company aims to drive consumption through innovation and communication. Additionally, private-label shares are flat to declining in both regions, which is seen as reassuring for the stable consumer outlook.

The paragraph discusses Andre Schulten's response to questions about currency outlook and its impact on financial forecasts. They are currently using spot rates for forecasting both the P&L and organic sales growth, acknowledging high volatility in European currencies. The impact of foreign exchange is expected to affect the second half of the financial year, and this has been incorporated into their guidance. To manage these challenges, they plan to rely on productivity improvements and pricing strategies. They are confident in achieving their productivity targets, with a $1.5 billion productivity guidance for cost-of-goods-sold and a $2 billion overall guidance, including SG&A.

The paragraph discusses the topic of pricing and innovation in enterprise markets. Jon Moeller emphasizes that their business model is heavily based on innovation, enabling them to modestly adjust pricing. Historical data shows that pricing has positively or neutrally contributed to their top-line growth in most recent years and quarters. The paragraph indicates confidence in the company's ability to apply modest pricing adjustments, supported by strong second-half innovation programs. Following this discussion, the operator prompts the next question from Brian Spillane of Bank of America, who asks about the impact of Chinese New Year on their 3% growth figure for the quarter and if market changes in China present strategic opportunities for expansion.

The China market results were not heavily impacted by phasing issues related to the timing of pre-shipments for the 11-11 event and remained stable throughout the quarter. SK-II returns to growth in China, contributing to easier comparisons, while core brands like Pantene, Head & Shoulders, and Olay experience innovation-driven progress. Strategic investments in the fastest-growing channel, with improved distributor collaboration, are yielding positive outcomes. Although trending positively, the market remains volatile, affecting guidance. Jon Moeller emphasizes leveraging marketplace changes in consumer and customer behavior for growth.

The paragraph discusses several significant changes in Procter & Gamble's business operations. First, they have altered the compensation structure for their distributor channels, now linking payments to category performance rather than total P&G business, which aims to drive behavior changes. They have also adjusted their operations in China to align more closely with their US and Europe models, allowing categories to manage processes from innovation to customer interaction. Additionally, P&G is reorienting customer discussions to focus on market growth, positioning themselves as strong partners in driving this growth. Lastly, there's a brief mention of the current input cost environment, with Peter Grom from UBS asking about the impact of raw material volatility on P&G's cost outlook, which remains at a $200 million after-tax headwind.

The paragraph features a discussion between Andre Schulten and analysts about the company's financial outlook. Schulten explains that any significant changes in input costs, particularly oil prices, will primarily impact the first half of the next fiscal year rather than the current year due to contract structures and variance holding. The company is cautious about input costs but believes the variability for the current year will be limited, with more volatility expected in foreign exchange rates. Andrea Teixeira of JPMorgan asks if the company feels more confident about reaching the midpoint of its top-line guidance, despite pressure on EPS growth due to FX headwinds.

The paragraph discusses a financial outlook and guidance, focusing on productivity and operating leverage. Andre Schulten addresses concerns about supplier disruptions and reassures that there were no significant impacts on sales for the quarter. He expresses confidence in achieving the lower end of the guidance range for organic sales growth and core EPS, but notes the possibility of reaching the midpoint if progress continues in regions like China, the Middle East, Europe, and North America. Schulten also mentions a disruption in their Transportation Management system that caused a backlog, but the team managed to resolve it better than expected.

In the article paragraph, Jon Moeller addresses questions from Robert Ottenstein regarding the health of the Chinese consumer and their business outlook. Despite ongoing challenges in the Chinese market, Moeller notes some signs of improvement, such as increased Chinese travel to Korea and Japan, which correlates with stronger performance in their SK-II brand in those countries. This suggests rising consumer confidence and willingness to spend on premium products. Moeller also mentions optimism about their innovations for 2025, hinting at potential positive impacts on their business performance.

The paragraph discusses concerns about China's economic growth, with Andre Schulten and another speaker noting that while the macro consumer environment is stable, it is not positive, as indicated by a 5% decline in markets over the past three and twelve months. Jon Moeller expresses confidence in their innovation program, citing positive consumer responses and successful test markets, although he cannot provide specific numerical data. The paragraph concludes with Bonnie Herzog from Goldman Sachs questioning the company's flexibility in meeting earnings per share (EPS) guidance, given potential deceleration in organic sales trends and moderating gross margin tailwinds, and whether they might need to reduce reinvestment levels to achieve their bottom-line goals.

In the paragraph, Jon Moeller discusses the company's approach to reinvesting in its business despite significant challenges like currency and commodity headwinds that led to a 50% reduction in profit over two years. During those challenging times, the company increased spending on innovation and commercialization, resulting in modest earnings growth. The commitment to supporting their strong innovation pipeline remains firm, even if it means accepting slightly lower returns. Filippo Falorni then asks about the enterprise market business, focusing on growth in Europe, Latin America, and expectations for the Middle East. Andre Schulten responds by noting 3% growth in Latin America amid tough previous comparables, challenging conditions in Mexico but with positive progress, and ongoing plans in Brazil.

The paragraph discusses expectations for growth in various markets. In Latin America, growth is expected to accelerate due to both an easier base and strong market plans. In Europe, the enterprise markets showed modest growth, with an increase in volume share, and there is confidence in market potential and execution. The Middle East, part of the AMA region, is anticipated to stabilize but still presents challenges. Chris Carey from Wells Fargo Securities inquires about category-specific details within the Family Care, Oral Care, and Baby businesses, questioning if the observed growth in Family Care is temporary and noting a slight underperformance in Oral Care. Additionally, future merchandising investments in the Baby business are mentioned, alongside a discussion of P&G's pricing strategy contributing to organic sales.

The paragraph discusses the recent performance and strategic decisions related to Family Care and Oral Care categories. For Family Care, there were strong shipments and consumption, influenced by pantry loading due to disruptions like a port strike and a hurricane in October, and anticipations of a January merge event. It notes a trend of sustained pantry inventory following such events. For Oral Care, the focus is on rolling out the iO innovation range, with products aimed at both high and low price points to increase market accessibility, even in high penetration areas like Europe.

The paragraph discusses the company's strong marketing and innovation strategies in oral care and baby product categories. In oral care, they emphasize the effectiveness of power brushes over manual ones and highlight their focus on whitening products as part of their innovation program. In the baby category, the company is investing in communication and promotions to support innovation, specifically mentioning the new Love's product and their premium products, Swaddlers and Cruisers. They aim to drive growth in this challenging category through a mix of innovation, visibility, consumer incentives, and effective communication. The final part includes a question from Olivia Tong about growth expectations in China, focusing on the impact of category growth versus market share improvements as they compare to previous less favorable periods.

In the paragraph, Andre Schulten and Jon Moeller discuss their company's investment strategy and market expectations, particularly regarding China. They express a hope for improvement in their business due to market cycles and strategic interventions like innovation and brand building, though they acknowledge unpredictability. Investment adjustments are made based on opportunities, with 30 basis-points of incremental investment in the first half being more moderate than in the past. They're optimizing their strategy, focusing on content improvement and selectively investing where necessary, indicating a slower investment pace compared to recent years. Jon Moeller adds a clarification on the context of a reported index.

The paragraph discusses the company's strategy for investments and cost optimization in marketing and commercialization. They aim to be more profitable in quickly expanding sectors by making strategic investments while also focusing on cost-saving measures. This includes bringing key opinion leaders in-house and leveraging R&D resources, which has proven effective and cost-efficient. Following this, an operator introduces Kevin Grundy from BNP Paribas, who asks about the company's capital allocation strategy. He inquires about the potential role of mergers and acquisitions (M&A) in enhancing shareholder value in a slower growth environment, and whether the company is considering accelerating share repurchases, given that consumer staples stocks have underperformed and are priced below historical averages. Jon Moeller responds, indicating that he will address the M&A question and Andre will handle the share repurchase query.

The paragraph discusses the company's approach to mergers and acquisitions (M&A) and capital allocation. The company typically does not consider acquisitions for growth due to its strong market positions, except in fragmented areas like personal healthcare and specialty beauty. They are cautious and only pursue acquisitions if they believe they can create value. Additionally, the company plans to return $16 billion to $17 billion to shareholders through dividends and share repurchases. Their capital allocation strategy focuses on supporting business growth, paying and potentially increasing dividends, pursuing sensible M&A opportunities, and returning excess cash to shareholders.

In the paragraph, Jon Moeller and Andre Schulten discuss their company's approach to managing foreign exchange (FX) pressures, particularly in enterprise markets like Latin America, by maintaining market discipline and combining pricing strategies with innovation. They highlight the success of this approach in Europe and Latin America. Regarding the SK-II brand, they note an unexpected improvement in its performance in China, attributed to enhanced brand strength and sentiment, especially as the perception of Japanese brands improves. They emphasize significant investments in brand-building as a key factor in this success.

The paragraph discusses efforts to enhance the brand presence and performance of SK-II. The company has increased media coverage, improved department store presence, and launched a super-premium product line called LXP, which has positively impacted brand equity. Consumption, particularly in travel retail, is recovering, despite negative sales figures. Increased Chinese travel and positive social media sentiment contribute to a more optimistic outlook compared to a previous Investor Day. SK-II is the fastest-growing brand in the premium skincare segment, although growth patterns may be complex due to base period dynamics.

The paragraph discusses the influence of the cough-cold season on consumer health trends, noting that a lack of significant illness through December has impacted growth. However, growth prospects for the broader Personal Health Care (PHC) business remain positive, with brands outside of the cough-cold sector performing well. The company continues to build market share within the cough-cold space. Pricing has been flat this quarter, but over three years, there's an average price increase of 4%, alongside positive volume growth. Jon Moeller and Andre Schulten also humorously mention a personal contribution to the business's growth, referencing illness within their families.

The paragraph discusses the company's strategy for future pricing and product innovation, indicating optimism about the ability to implement price increases by offering more effective and superior products to consumers. Jon Moeller anticipates that as they introduce innovative products, modest price increases can be justified, potentially boosting revenue. Linda Bolton-Weiser inquires about the company's performance in the beauty segment, particularly in the US. Andre Schulten responds by highlighting successes and opportunities in North America's beauty sector, mentioning strong growth in the antiperspirant, deodorant, and personal care businesses. However, he acknowledges the overall volume decline in the beauty category by 1% despite these successes.

The paragraph discusses the current state of the beauty and personal care market in North America and globally, noting a 3% increase in hair care sales and a decline in skincare sales, particularly in the jar segment, due to distribution changes and shifting consumer preferences. The text highlights efforts to innovate in skincare and addresses similar dynamics globally, with a particular focus on the need to adapt to the market shift in China from tone benefits to anti-aging and multi-benefit products. Despite these challenges, there is strong performance in other categories, such as hair care and personal care. Jon Moeller comments on the situation in China, noting that while beauty sales are up, volume is down 6%, and the market presents both opportunities and challenges. Finally, the operator introduces a question from Robert Moscow regarding pricing, noting that this is the first quarter with flat pricing in a while.

The paragraph discusses the impact of pricing and product mix on a company's organic sales growth. Pricing, often influenced by innovation and external factors like foreign exchange rates and commodity prices, consistently contributes positively to sales growth. The focus is on trade-up within product categories, where consumers opt for higher-performing and more expensive variants. This leads to increased sales and profit per unit but results in a slightly negative effect on gross margin due to the higher costs associated with premium products. The company expects these trends of pricing through innovation and positive mix dynamics to continue.

In the paragraph, Jon Moeller discusses the company's approach to pricing, emphasizing that they focus on value creation rather than considering negative pricing. He mentions recent discussions with retail partners, including CEOs of large European retailers, highlighting their collaborative efforts to achieve market growth efficiently. Moeller describes these conversations as positive and focused on optimizing supply chains to benefit both his company and retail partners. Overall, he conveys confidence in the ongoing partnerships and their strategy heading into the second half of the fiscal year.

In the US retail environment, certain retailers are performing exceptionally well while others face challenges, with discussions varying among different customers. Overall, the situation is similar to Europe. Andre Schulten wraps up the call by noting a good quarter with progress in various regions and expresses cautious optimism for the future. He invites any follow-up questions and ends by thanking participants, with the operator concluding the conference.

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