P&G reports slight organic growth in 3rd fiscal quarter, with net income of US$3.8 billion

Procter & Gamble released its financial results for the third quarter of fiscal year 2025, which ended in March. The company reported net sales of US$19.8 billion, which represents a drop of 2% compared to the same period last year. Despite this, organic sales – which disregard the effects of foreign exchange, acquisitions and divestments – grew by 1%, driven mainly by price increases.

The company’s net profit for the quarter was US$3.8 billion, with an operating cash flow of US$3.7 billion. Diluted earnings and adjusted earnings per share were US$1.54, both up 1% on the same period of the previous fiscal year.

P&G highlighted an adjusted free cash flow yield of 75%, calculated as operating cash flow minus capital investments, in relation to net income. In the quarter, the company returned US$ 3.8 billion to shareholders – US$2.4 billion in dividends and US$1.4 billion in share buybacks. The recent dividend hike marks the 69th consecutive year of increases and the 135th straight year of payouts since the company’s founding in 1890.

“We delivered modest organic sales and EPS growth this quarter in a challenging and volatile geopolitical and consumer environment,” said Jon Moeller, P&G’s CEO and Chairman of the Board. “We are making appropriate adjustments to our near-term outlook to reflect underlying market conditions while remaining confident in the long-term growth prospects of our brands and the markets in which we compete.”

BABY, FEMALE AND FAMILY CARE

P&G recorded a slight organic decline of 1% in the “Baby, Feminine and Family Care” category, which brings together products such as disposable diapers, feminine pads and household care items such as toilet paper and paper towels.

According to the report, the downturn was mainly driven by a drop in volume and greater promotional intensity in some regions and categories.

• Disposable diapers: the baby care line – which includes brands such as Pampers – showed a slight drop in sales volume. The company did not detail the performance by region but attributed the performance to the reduction in consumption in some markets and the high comparison base of previous periods, especially in emerging countries.
• Feminine products: the sanitary napkin category – with brands such as Always – remained stable in the quarter. Despite the price adjustments made previously, there was no significant organic growth, and volume remained at the same level as the previous year.
• Family care: the Family Care division, responsible for products such as Charmin toilet paper and Bounty paper towels, showed the weakest performance within the segment. The decline was attributed to a drop in volume and the impact of promotional actions, which put pressure on the category’s margins.

FISCAL YEAR PROJECTIONS

For fiscal year 2025, P&G expects total sales to remain stable compared to the previous year, while organic sales are expected to grow by around 2%. The company has revised its estimate for growth in diluted net earnings per share, which should now vary between 6% and 8% compared to the result of US$6.02 obtained in fiscal year 2024. The expectation for adjusted earnings per share has also been updated and should be between US$6.72 and US$6.82, which represents a 2% to 4% increase on the previous year’s core EPS of US$6.59.

Among the main challenges foreseen are the negative impacts of approximately US$200 million after tax, both due to commodity costs and unfavorable exchange rate effects. Together, these pressures represent an estimated reduction of US$0.16 in earnings per share. The company also expects a slight additional pressure on adjusted profit from the difference between financial income and expenses, as well as positive non-recurring effects in the previous year from smaller divestments, which are not expected to be repeated with the same intensity. These two factors together represent a reduction of around US$0.04 per share.

Regarding the tax burden, P&G expects the adjusted effective rate to remain in line with the previous fiscal year. The company estimates that capital expenditure will be between 4% and 5% of net sales for the year and continues to project an adjusted free cash flow yield of around 90%. Finally, the company maintains its commitment to shareholder remuneration and plans to pay out approximately US$10 billion in dividends and repurchase between US$6 billion and US$7 billion in shares over the course of the fiscal year.