Procter And Gamble — Financial Results

Revenue Was Essentially Flat, But Underlying Growth Was Modest

Reported sales were almost unchanged year-over-year, but the headline number is a bit misleading. Organic sales (which strips out currency swings and portfolio changes) grew 2%, with every business unit contributing at least a little. The problem is that a weakening of foreign currencies against the U.S. dollar wiped out most of that real-world progress when translated back into dollars — a recurring headache for a company that earns more than half its revenue outside the U.S.

Profits Improved Meaningfully, Largely Due to Cost Discipline

Selling, general and administrative (SG&A) costs — essentially the overhead and marketing budget — fell 80 basis points (hundredths of a percent) as a share of sales, driven by productivity savings and lower marketing spend. That improvement, combined with the absence of a $1.3 billion Gillette write-down that hit last year's numbers, pushed operating profit up sharply. The more apples-to-apples Core EPS figure (which excludes one-time items) grew a more modest 4%.

A Major Cost-Cutting Plan Is Underway, Including 7,000 Job Cuts

In June 2025, P&G announced a new portfolio and productivity restructuring plan expected to cost $1.5 to $2.0 billion before tax over two years. The plan includes eliminating up to 7,000 non-manufacturing office and management roles by the end of fiscal 2027. Half the costs are expected to hit by end of fiscal 2026. This comes on top of an earlier restructuring related to exiting Argentina and Nigeria, which alone cost $1.2 billion after tax. The goal is a leaner cost structure — but the near-term charges will weigh on reported earnings.

Cash Generation Declined Noticeably

Adjusted free cash flow (cash left after capital spending, a key measure of financial health) fell 14% to $14.6 billion. Higher inventory levels, pension payments, and a $562 million tax payment related to a 2017 U.S. tax law all consumed cash. The company's own target for free cash flow productivity is 90% or above — at 87%, it came in just below that benchmark this year.

Beauty Is Struggling, Especially the Premium SK-II Brand

The Beauty segment was the only one to post an outright decline, with net sales falling 2% to $15.0 billion and net earnings dropping 8% to $2.7 billion. The SK-II luxury skincare brand — which carries above-average prices — saw continued weakness, dragging down the overall mix. Skin care organic sales fell high single digits, including mid-teens declines in North America and Asia Pacific. Greater China, a critical market for premium beauty, remains soft due to market contraction and competitive pressure.