Introduction & Market Context
Procter & Gamble (NYSE:PG) released its third-quarter fiscal 2025 earnings presentation on April 24, 2025, revealing modest growth amid challenging market conditions. The consumer goods giant reported core earnings per share of $1.54, up 1% year-over-year but slightly below analyst expectations of $1.55. Revenue came in at $19.78 billion, significantly missing the forecast of $20.36 billion.
The company’s stock responded negatively to the results, falling 4.99% to $157.46 by market close, as investors reacted to the revenue shortfall and slowing growth trajectory.
Quarterly Performance Highlights
P&G’s Q3 FY 2025 results showed organic sales growth of just 1%, driven entirely by pricing as volume remained flat and mix was neutral. This represents a continued deceleration from the 7% organic growth seen in Q1 FY 2024.
As shown in the following chart of quarterly organic sales growth:
The company maintained that 7 of its 10 product categories grew or held organic sales for the quarter, though global aggregate value share modestly declined. P&G reported that 27 of its top 50 category/country combinations held or grew share during the period.
Core earnings per share growth has similarly slowed, with Q3 showing just 1% growth compared to double-digit increases throughout most of fiscal 2024:
On a currency-neutral basis, core EPS performed slightly better at 3% growth, indicating that foreign exchange headwinds impacted reported results:
The company’s adjusted free cash flow productivity stood at 75%, while core operating margin improved by 90 basis points despite a 30 basis point decline in core gross margin. Total productivity savings contributed 280 basis points to results, helping offset various headwinds.
The following slide summarizes P&G’s key Q3 FY 2025 metrics:
Segment Performance Analysis
P&G’s business segments showed varied performance in Q3, with Health Care leading growth while the Baby, Feminine & Family Care segment struggled:
Health Care: Posted the strongest results with 4% organic sales growth, driven by a favorable mix (+3%) and pricing (+1%), though volume declined 1%. Net earnings increased 8%, or 12% on a constant currency basis. Global Oral Care and Personal Health Care value shares improved.
Grooming: Delivered 3% organic sales growth with a 1% volume increase and 2% pricing contribution. Net earnings rose 6% (13% currency-neutral), though global value share decreased 0.5 points.
Beauty: Achieved 2% organic sales growth with 1% volume growth and 3% pricing, offset by a negative 2% mix impact. However, net earnings declined 8% (-3% currency-neutral), affected by negative category and geographic mix plus unfavorable foreign exchange.
Fabric & Home Care: Reported flat organic sales and volume, with net earnings down 1% but up 2% on a currency-neutral basis. Global Fabric Care share decreased 0.4 points while Home Care share increased 0.7 points.
Baby, Feminine & Family Care: Experienced the weakest performance with a 1% organic sales decline and 2% volume decrease, partially offset by a 1% positive mix. Net earnings fell sharply by 12% (-10% currency-neutral), primarily due to increased commodity costs and negative category mix.
Forward Guidance & Strategy
Despite the challenging quarter, P&G maintained its fiscal 2025 guidance, projecting 2% organic sales growth and 0% net sales growth, with the latter including a 2% negative impact from foreign exchange and acquisitions/divestitures.
The company’s comprehensive FY 2025 guidance is summarized in the following slide:
For earnings, P&G expects core EPS growth of 2% to 4% ($6.72 to $6.82) and all-in EPS growth of 6% to 8%. The guidance incorporates $200 million after-tax headwinds from both commodities and foreign exchange.
P&G plans to maintain strong shareholder returns with approximately $10 billion in dividends and $6-7 billion in direct share repurchases. The company projects adjusted free cash flow productivity of 90% and capital spending at 4-5% of sales.
The presentation highlighted several potential headwinds not included in the guidance, such as significant market growth deceleration, currency weakness, commodity cost increases, geopolitical disruptions, supply chain issues, and tariff changes.
Market Reaction & Analyst Perspectives
The market’s negative reaction to P&G’s results reflects concerns about the company’s ability to maintain growth amid challenging consumer trends. The stock’s 4.99% decline brings it closer to its 52-week low of $156.59, indicating investor skepticism about near-term prospects.
During the earnings call, CFO Andre Shulten emphasized the company’s commitment to innovation, stating, "We will continue to double down on innovation," and "Our best response is to have the best brands available with the best value equation." These comments suggest P&G is focusing on product development and value proposition to navigate the current environment.
Analysts questioned the company’s strategies to mitigate tariff impacts and sustain innovation amid slowing growth. Management highlighted bright spots in regional performance, particularly Latin America, where organic sales grew by 6%, contrasting with softer trends in the US and Europe.
P&G’s integrated growth strategy continues to focus on five key areas: portfolio management, product superiority, organizational agility, constructive disruption, and productivity to fuel investments. The company also emphasizes supply chain resilience, environmental sustainability, digital capabilities, and employee value proposition as critical focus areas for navigating current market challenges.
Full presentation:
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