What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-08-04 compared with 2024-08-05 · 240 added, 219 removed, 537 unchanged (46% of the section changed)

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Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

Forward-looking statements may appear throughout this report, including without limitation, the following sections:

Forward-looking statements may appear throughout this report, including without limitation, in the following sections:

“Management's Discussion and Analysis,” “Risk Factors” and "Notes 4, 8 and 13 to the Consolidated Financial Statements." These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result” and similar expressions.

Forward-looking statements are based on current expectations and assumptions, which are subject to risks and uncertainties that may cause results to differ materially from those expressed or implied in the forward-looking statements.

We undertake no

We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or otherwise, except to the extent required by law.

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obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or otherwise, except to the extent required by law.

Risks and uncertainties to which our forward-looking statements are subject include, without limitation:

(1) the ability to successfully manage global financial risks, including foreign currency fluctuations, currency exchange or pricing controls;

(1) the ability to successfully manage global financial risks, including foreign currency fluctuations, changes in global interest rates and rate differentials, currency exchange or pricing controls and tariffs;

(2) the ability to successfully manage local, regional or global economic volatility, including reduced market growth rates, and to generate sufficient income and cash flow to allow the Company to effect the expected share repurchases and dividend payments;

(3) the ability to successfully manage uncertainties related to changing political and geopolitical conditions and potential implications such as exchange rate fluctuations, market contraction, boycotts, sanctions or other trade controls;

(4) the ability to manage disruptions in credit markets or to our banking partners or changes to our credit rating;

(5) the ability to maintain key manufacturing and supply arrangements (including execution of supply chain optimizations and sole supplier and sole manufacturing plant arrangements) and to manage disruption of business due to various factors, including ones outside of our control, such as natural disasters, acts of war or terrorism or disease outbreaks;

(6) the ability to successfully manage cost fluctuations and pressures, including prices of commodities and raw materials and costs of labor, transportation, energy, pension and healthcare;

(6) the ability to successfully manage cost fluctuations and pressures, including prices of commodities and raw materials and costs of labor, transportation, energy, pensions and healthcare;

(7) the ability to compete with our local and global competitors in new and existing sales channels, including by successfully responding to competitive factors such as prices, promotional incentives and trade terms for products;

(8) the ability to manage and maintain key customer relationships;

(9) the ability to protect our reputation and brand equity by successfully managing real or perceived issues, including concerns about safety, quality, ingredients, efficacy, packaging content, supply chain practices or similar matters that may arise;

(10) the ability to successfully manage the financial, legal, reputational and operational risk associated with third-party relationships, such as our suppliers, contract manufacturers, distributors, contractors and external business partners;

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(15) the ability to successfully achieve productivity improvements and cost savings and manage ongoing organizational changes while successfully identifying, developing and retaining key employees, including in key growth markets where the availability of skilled or experienced employees may be limited;

(16) the ability to successfully manage current and expanding regulatory and legal requirements and matters (including, without limitation, those laws and regulations involving product liability, product and packaging composition, manufacturing processes, intellectual property, labor and employment, antitrust, privacy, cybersecurity and data protection, artificial intelligence, tax, the environment, due diligence, risk oversight, accounting and financial reporting) and to resolve new and pending matters within current estimates;

(16) the ability to successfully manage current and expanding regulatory and legal requirements and matters (including, without limitation, those laws, regulations, policies and related interpretations involving product liability, product and packaging composition, manufacturing processes, intellectual property, labor and employment, antitrust, privacy, cybersecurity, data protection and data transfers, artificial intelligence, tax, the environment, due diligence, risk oversight, accounting and financial reporting) and to resolve new and pending matters within current estimates;

(17) the ability to manage changes in applicable tax laws and regulations;

and (18) the ability to successfully achieve our ambition of reducing our greenhouse gas emissions and delivering progress towards our environmental sustainability priorities.

and (18) the ability to continue delivering progress towards our environmental sustainability ambitions.

A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from those projected herein is included in the section titled "Economic Conditions and Uncertainties" and the section titled "Risk Factors" (Part I, Item 1A) of this Form 10-K.

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GAAP, including organic sales growth, Core earnings per share (Core EPS), adjusted free cash flow and adjusted free cash flow productivity.

The explanation at the end of the MD&A provides the

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definition of these non-GAAP measures, details on the use and the derivation of these measures, as well as reconciliations to the most directly comparable U.S.

The explanation at the end of the MD&A provides the definition of these non-GAAP measures, details on the use and the derivation of these measures, as well as reconciliations to the most directly comparable U.S.

GAAP measure.

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Management also uses certain market share and market consumption estimates to evaluate performance relative to competition despite some limitations on the availability and comparability of share and consumption information.

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All market share references represent the percentage of sales of our products in dollar terms on a constant currency basis relative to all product sales in the category.

The Company measures quarter and fiscal year-to-date market shares through the most recent period for which market share data is available, which typically reflects a lag time of one or two months as compared to the end of the reporting period.

The Company measures market shares through the most recent period for which market share data is available, which typically reflects a lag time of one or two months as compared to the end of the reporting period.

Management also uses unit volume growth to evaluate drivers of changes in net sales.

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Our products are sold in about 180 countries and territories primarily through mass merchandisers, e-commerce (including social commerce) channels, grocery stores, membership club stores, drug stores, department stores, distributors, wholesalers, specialty beauty stores (including airport duty-free stores), high-frequency stores, pharmacies, electronics stores and professional channels.

We also sell direct to individual consumers.

We also sell direct to consumers.

We have on-the-ground operations in about 70 countries.

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Head & Shoulders, Herbal Essences, Pantene, Rejoice

Skin and Personal Care ( Antiperspirants and Deodorants, Personal Cleansing, Skin Care )

Olay, Old Spice, Safeguard, Secret, SK-II, Native

Personal Care (2) (Antiperspirants and Deodorants, Personal Cleansing)

Native, Old Spice, Safeguard, Secret

Skin Care (2) ( Facial Moisturizers, Cleaners and Treatments )

Grooming 8% 10% Grooming ( Appliances, Female Blades & Razors, Male Blades & Razors, Pre- and Post-Shave Products, Other Grooming )

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(1) Percent of Net sales and Net earnings for the fiscal year ended June 30, 2025 (excluding results held in Corporate).

(2) Effective July 1, 2024, the Beauty reportable business segment separated Skin and Personal Care into individual operating segments, Skin Care and Personal Care.

This transition included separation of the management team, strategic decision-making, innovation plans, financial targets, budgets and management reporting.

Organization Design:

Sector Business Units

We are a global market leader amongst the beauty categories in which we compete, including hair care and skin and personal care.

The beauty categories in which we compete are hair care, personal care and skin care.

We are a global market leader in the retail hair care market with about 20% global market share primarily behind our Head & Shoulders and Pantene brands.

In skin and personal care, we offer a wide variety of products, ranging from deodorants to personal cleansing to skin care, such as our Olay brand, which is one of the top facial skin care brands in the world with about 5% global market share.

In personal care, we have the number two market share position with about 20% global market share, primarily behind our Old Spice, Safeguard and Secret brands.

In skin care, the Olay brand is one of the top facial skin care brands in the world with about 5% global market share.

We are the global market leader in the grooming market, where we hold more than 45% share.

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We compete in oral care and personal health care.

In oral care, there are several global competitors in the market, and we have the number two market share position with about 20% global market share behind our Crest and Oral-B brands.

In oral care, we are a leader with a nearly 30% global market share behind our Crest and Oral-B brands.

In personal health care, we are a global market leader among the categories in which we compete, including respiratory treatments, digestive wellness, sleep aids, vitamins and analgesics behind our Vicks, Metamucil, Pepto-Bismol and Neurobion brands.

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In fabric care, we generally have the number one or number two market share position and are the global market leader with over 35% market share in the markets in which we compete, primarily behind our Tide, Ariel and Downy brands.

Our global home care market share is about 25% across the categories in which we compete, primarily behind our Cascade, Dawn, Febreze and Swiffer brands.

Our global home care market share is more than 30% across the categories in which we compete, primarily behind our Cascade, Dawn, Febreze and Swiffer brands.

Baby, Feminine & Family Care:

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We generally have the number one or number two market share position in the markets in which we compete, primarily behind our Pampers brand.

We are a global market leader in the feminine care category with over 20% global market share.

We compete in the menstrual care sub-category primarily behind our Always and Tampax brands with over 25% global market share.

We also compete in the adult incontinence sub-category behind Always Discreet, with about 15% market share in the markets in which we compete.

We are the global market leader in the feminine care category with over 30% global market share.

We compete in the menstrual care sub-category primarily behind our Always and

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Tampax brands with over 35% global market share.

We also compete in the adult incontinence sub-category behind Always Discreet, with over 15% market share in the markets in which we compete.

Our family care business is predominantly a North American business comprised primarily of the Bounty paper towel and Charmin toilet paper brands.

North America market shares are over 40% for Bounty and over 25% for Charmin.

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Enterprise Markets

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Ongoing productivity improvement is strategic and crucial to delivering our balanced top- and bottom-line growth, cash generation and value creation objectives.

Productivity improvement enables investments to strengthen the superiority of our brands via product and packaging innovation, more efficient and effective supply chains, equity and awareness-building brand advertising and other programs and expansion of sales coverage and R&D programs.

Productivity improvements also enable us to mitigate and manage through periods of challenging cost environments (including periods of increasing commodity, inflation and negative foreign exchange impacts).

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Additionally, to further strengthen our integrated strategy, we have declared four focus areas.

These are 1) leveraging environmental sustainability as an additional driver of superior performing products and packaging innovations, 2) increasing digital acumen to drive consumer and customer preference, reduce cost and enable rapid and efficient decision making, 3) developing next-level supply chain capabilities to enable flexibility, agility, resilience and a new level of productivity and 4) delivering a superior employee value equation for all employees inclusive of all genders, races, ethnicities, sexual orientations, ages and abilities - for all roles - to ensure we continue to attract, retain and develop the best talent to better serve our diverse consumer base.

These are 1) leveraging environmental sustainability as an additional driver of superior performing products and packaging innovations, 2) increasing digital acumen to drive consumer and customer preference, reduce cost and enable rapid and efficient decision making, 3) developing next-level supply chain capabilities to enable flexibility, agility, resilience and a new level of productivity and 4) delivering a superior employee value equation for all employees inclusive of all genders, races, ethnicities, sexual orientations, ages and abilities to ensure we continue to attract, retain and develop the best talent to better serve our increasingly diverse consumer base.

We believe this strategy is right for the long-term health of the Company and our objective of delivering total shareholder return in the top one-third of our peer group.

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• Organic sales growth above market growth rates in the categories and geographies in which we compete;

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• Core EPS growth of mid-to-high single digits;

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While periods of significant macroeconomic pressures may cause short-term results to deviate from the long-term growth algorithm, we intend to maintain a disciplined approach to investing in our business.

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RECENT DEVELOPMENTS

Limited Market Portfolio Restructuring

In December 2023, the Company announced a limited market portfolio restructuring of its business operations, primarily in certain Enterprise Markets, including Argentina and Nigeria, to address challenging macroeconomic and fiscal conditions.

In connection with this announcement, the Company announced that it expected to record incremental restructuring charges of $1.0 to $1.5 billion after tax, consisting primarily of foreign currency translation losses to be recognized as non-cash charges upon the substantial liquidation of operations in the affected markets.

As of June 30, 2024, the Company has substantially liquidated its operations in certain Enterprise Markets, including Nigeria, and recorded a non-cash charge of $216 million after tax for accumulated currency translation losses previously included in Accumulated other comprehensive income/(loss).

On July 1, 2024, the Company completed the divestiture of its business in Argentina.

The Company expects to record a non-cash charge of approximately $750 million for accumulated currency translation losses in the first quarter of the fiscal year ending June 30, 2025.

In the fiscal year ended June 30, 2024, the Company started a limited market portfolio restructuring of its business operations, primarily in certain Enterprise Markets, including Argentina and Nigeria, to address challenging macroeconomic and fiscal conditions.

During the period ended September 30, 2024, the Company completed this limited market portfolio restructuring with the substantial liquidation of its operations in Argentina and recorded incremental restructuring charges of $801 million after tax, comprised primarily of non-cash charges for accumulated foreign currency translation losses previously included in Accumulated other comprehensive income/(loss).

The total incremental restructuring charges incurred under the program beginning in the three-month period ended December 31, 2023, through the three-month period ended September 30, 2024, were $1.2 billion after tax.

Consistent with our historical policies for ongoing restructuring-type activities, resulting charges were funded by and included within Corporate for segment reporting.

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For a more detailed discussion of the Gillette impairment, refer to Note 4 to the Consolidated Financial Statements.

Focused Portfolio, Supply Chain and Productivity Plan

In June 2025, the Company announced a portfolio and productivity plan to streamline its portfolio and organization to improve its cost structure and competitiveness.

The Company expects to incur approximately $1.5 to $2.0 billion in before-tax restructuring costs over a two-year period, including costs incurred as part of this plan and the ongoing plan.

The Company expects to incur half of the costs under this plan by the end of fiscal 2026, with the remainder incurred in fiscal 2027.

The restructuring activities will be executed across the Sector Business Units as well as the Enterprise Markets, Corporate Functions and Global Business Services.

These restructuring activities include a plan for a reduction of up to 7,000 non-manufacturing overhead personnel by the end of fiscal 2027.

Glad Joint Venture Agreement

The Company and The Clorox Company (Clorox) have jointly decided not to renew the Glad joint venture agreement.

Under the terms of the agreement, Clorox will purchase the Company’s minority interest in the venture at fair market value as of the agreement termination in January 2026.

Subject to market conditions and the parties' negotiations with respect to fair market value, the Company expects to receive cash proceeds of approximately $500 million and record an after-tax gain in the range of $250 to $300 million in the third quarter of the fiscal year ended June 30, 2026.

SUMMARY OF 2025 RESULTS

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Cash flow from operating activities 17,817 19,846 (10) %

• Net sales increased 2% to $84.0 billion versus the prior year.

The net sales growth was driven by mid-single-digit increases in Health Care, Fabric & Home Care and Grooming and a low single-digit increase in Beauty.

Net Sales were unchanged in Baby, Feminine & Family Care.

• Net sales increased $245 million to $84.3 billion versus the prior year.

Net sales increased low single digits in Health Care and was unchanged in Grooming, Fabric & Home Care and Baby, Feminine & Family Care.

Net Sales declined low single digits in Beauty.

Organic sales, which exclude the impact of acquisitions and divestitures and foreign exchange, increased 2%.

Organic sales increased high single digits in Grooming, mid-single digits in Fabric & Home Care and Health Care and low single digits in Beauty and Baby, Feminine & Family Care.

• Operating income increased $411 million, or 2%, to $18.5 billion due to the increase in net sales, partially offset by the non-cash impairment charge of $1.3 billion related to the Gillette intangible asset.

• Net earnings increased $236 million, or 2%, to $15.0 billion due to the increase in operating income, partially offset by a higher effective tax rate.

Foreign exchange impacts reduced net earnings by approximately $589 million.

• Net earnings attributable to Procter & Gamble increased $226 million, or 2%, to $14.9 billion.

Organic sales increased low single digits in all Sector Business Units.

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• Operating income increased $1.9 billion, or 10%, to $20.5 billion due to a reduction in selling, general and administrative costs (SG&A) in the current year and the non-cash impairment charge of $1.3 billion ($1.0 billion after tax) on the Gillette intangible asset in the prior year.

• Net earnings increased $1.1 billion, or 7%, to $16.1 billion due to the increase in operating income, partially offset by higher restructuring charges in the current year, which includes $801 million after tax related to the substantial liquidation of operations in Argentina.

• Net earnings attributable to Procter & Gamble increased $1.1 billion, or 7%, to $16.0 billion.

• Diluted EPS increased 8% to $6.51 due to the increase in net earnings.

Core EPS, which excludes the charge for the Gillette intangible asset impairment and incremental restructuring charges, increased 12% to $6.59.

Core EPS, which excludes incremental restructuring charges and the prior year Gillette intangible asset charge, increased 4% to $6.83.

• Cash flow from operating activities was $17.8 billion.

◦ Adjusted free cash flow, which is operating cash flow less capital expenditures and certain other impacts, was $16.9 billion.

◦ Adjusted free cash flow productivity, which is the ratio of adjusted free cash flow to net earnings excluding the Gillette intangible asset impairment charge and a non-cash charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in certain Enterprise Markets, including Nigeria, was 105%.

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ECONOMIC CONDITIONS AND UNCERTAINTI ES

◦ Adjusted free cash flow, which is defined as operating cash flow less capital expenditures and excluding payments for the transitional tax resulting from the 2017 U.S.

Tax Act, was $14.6 billion.

◦ Adjusted free cash flow productivity, which is defined as adjusted free cash flow as a percentage of net earnings excluding the non-cash charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina, was 87%.

ECONOMIC CONDITIONS AND UNCERTAINTIES

Global Economic Conditions.

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As a result, we are exposed to global macroeconomic factors, geopolitical tensions and government policies.

We are exposed to market risks from operating in challenging environments due to economic, political and social instabilities, natural disasters, debt and credit issues, currency controls, foreign exchange and interest rate changes.

We are exposed to various risks due to economic, political and social instabilities, market volatility, natural disasters, debt and credit issues, currency controls, new or increased tariffs, foreign exchange and interest rate changes.

These risks can negatively impact our net sales, net earnings and cash flows.

For example, we are exposed to risks due to the ongoing war between Russia and Ukraine.

Our Russia business accounted for less than 2% of consolidated net sales, net earnings and net assets as of June 30, 2024.

Our Russia business accounted for 1% of consolidated net sales, net earnings and net assets as of June 30, 2025.

Foreign Exchange.

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Transaction exposures involve impacts from 1) input costs that are denominated in currencies other than the local reporting currency and 2) revaluation of working capital balances denominated in currencies other than the functional currency.

We have experienced significant foreign exchange impacts in the past due to the weakening of certain foreign currencies versus the US dollar, which have negatively impacted net sales, net earnings and cash flows.

We have experienced significant foreign exchange impacts in the past due to the weakening of certain foreign currencies versus the U.S.

dollar, which have negatively impacted net sales, net earnings and cash flows.

In response to the devaluation of foreign currencies (including those deemed highly inflationary), any lags or inability (due to government restrictions) to implement price increases or the negative impacts of such actions on product consumption may lead to a decline in our net sales, net earnings and cash flows.

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RESULTS OF OPERATIONS

The key metrics included in the discussion of our consolidated results of operations include net sales, gross margin, selling, general and administrative costs (SG&A), operating margin, other non-operating items, income taxes and net earnings.

The primary factors driving year-over-year changes in net sales include overall market growth in the categories in which we compete, product initiatives, competitive activities (the level of initiatives, pricing and other activities by competitors), marketing spending, retail executions (both in-store and online) and acquisition and divestiture activity, all of which drive changes in our underlying unit volume, as well as our pricing actions (which can also impact volume), changes in product and geographic mix and foreign exchange impacts on sales outside the U.S.

For most of our categories, our cost of products sold and SG&A are variable in nature to some extent.

The key metrics included in the discussion of our consolidated results of operations include net sales, gross margin, SG&A, operating margin, other non-operating items, income taxes and net earnings.

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store and online) and acquisition and divestiture activity, all of which drive changes in our underlying unit volume, as well as our pricing actions (which can also impact volume), changes in product and geographic mix and foreign exchange impacts on sales outside the U.S.

Our cost of products sold and SG&A are variable in nature to some extent.

Accordingly, our discussion of these operating costs focuses primarily on relative margins rather than the absolute year-over-year changes in total costs.

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The main drivers of changes in SG&A as a percentage of net sales are overhead and marketing cost savings, reinvestments (for example, increased advertising), inflation, foreign exchange fluctuations and scale impacts.

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For a detailed discussion of the fiscal 2024 year-over-year changes, please refer to the MD&A in Part II, Item 7 of the Company's Form 10-K for the fiscal year ended June 30 , 2024 .

Net sales increased 2% to $84.0 billion in fiscal 2024.

The increase in net sales was driven by higher pricing of 4%, partially offset by unfavorable foreign exchange of 2%.

Net sales increased $245 million to $84.3 billion in fiscal 2025 as an increase in net sales driven by pricing of 1% was mostly offset by unfavorable foreign exchange of 1%.

Volume and mix were unchanged versus the prior year.

Net sales increased mid-single digits in Health Care, Fabric & Home Care and Grooming and increased low single digits in Beauty.

Net sales were unchanged in Baby, Feminine & Family Care.

Net sales increased low single digits in Health Care and was unchanged in Grooming, Fabric & Home Care and Baby, Feminine & Family Care.

Net sales decreased low single digits in Beauty.

Organic sales, which exclude the impacts of acquisitions and divestitures and foreign exchange, increased 2%.

Organic sales increased high single digits in Grooming, mid-single digits in Fabric & Home Care and Health Care and low single digits in Beauty and Baby, Feminine & Family Care.

Organic sales increased low single digits in all Sector Business Units.

Operating Costs

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Net earnings attributable to Procter & Gamble 19.0 % 17.7 % 130 bps

Gross margin increased 350 basis points to 51.4% of net sales.

The increase in gross margin was due to:

• a 220 basis-point increase from manufacturing productivity savings,

• 160 basis points of lower commodity costs and

• a 170 basis-point increase from higher pricing.

These increases were partially offset by:

• an 80 basis-point decline from unfavorable product mix including the decline of the super-premium SK-II brand,

• a 60 basis-point decline from unfavorable foreign exchange impacts,

• 30 basis points of product and packaging investments and

• 30 basis points of one-time manufacturing related costs including capacity startup costs.

Total SG&A increased 10% to $23.3 billion due to increased marketing spending and overhead costs.

SG&A as a percentage of net sales increased 200 basis points to 27.7% due primarily to the increase in marketing spending as a percentage of net sales.

• Marketing spending as a percentage of net sales increased 170 basis points as the increase in marketing spending was partially offset by the positive scale impacts of the net sales increase and productivity savings.

• Overhead costs as a percentage of net sales increased 20 basis points due to wage inflation and other cost increases, partially offset by the positive scale impacts of the net sales increase and productivity savings.

Gross margin decreased 20 basis points to 51.2% of net sales.

The decrease in gross margin was due to:

• 110 basis points of decline from unfavorable product mix,

• 50 basis points of product and packaging investments,

• 30 basis points of higher commodity costs,

• 20 basis points of unfavorable foreign exchange impacts,

• 10 basis points of higher transportation costs and other costs and

• 10 basis points of higher costs from tariffs.

These decreases were partially offset by:

• 180 basis points of manufacturing productivity savings and

• 30 basis points of increase due to higher pricing.

Total SG&A decreased 3% to $22.7 billion and SG&A as a percentage of net sales decreased 80 basis points to 26.9% due to decreased marketing spending and higher foreign exchange transactional charges in the prior year period.

• Marketing spending as a percentage of net sales decreased 50 basis points due to a decrease in marketing spending and productivity savings.

• Overhead costs as a percentage of net sales decreased 10 basis points as wage inflation headwinds were more than offset by productivity savings, which includes adjustments to variable compensation payouts.

• Other operating expenses as a percentage of net sales decreased 30 basis points driven by favorable foreign exchange impacts.

Productivity-driven cost savings delivered 140 basis points of benefit to SG&A as a percentage of net sales.

In the fiscal year ended June 30, 2024, the Company recorded a non-cash impairment charge of $1.3 billion ($1.0 billion after tax) on the Gillette intangible asset.

The impairment charge arose from a reduction in the estimated fair value of the Gillette indefinite-lived intangible asset due to a higher discount rate, weakening of several currencies relative to the U.S.

dollar and the impact of the limited market portfolio restructuring program.

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Operating income increased $1.9 billion, or 10%, to $20.5 billion and operating margin increased 220 basis points to 24.3% due primarily to the decrease in SG&A and the non-cash impairment charge of $1.3 billion ($1.0 billion after tax) on the Gillette intangible asset in the prior year.

For further discussion of the Gillette impairment charge, refer to Note 4 to the Consolidated Financial Statements.

Operating margin was unchanged at 22.1% as the increase in gross margin was more than fully offset by the increase in SG&A as a percentage of net sales and the non-cash impairment charge, as discussed above.

Operating income increased $411 million, or 2%, to $18.5 billion due to the increase in net sales, as discussed above.

Non-Operating Items

• Interest expense was $925 million, an increase of $169 million versus the prior year due primarily to higher interest rates.

• Interest income was $473 million, an increase of $166 million versus the prior year due primarily to higher interest rates.

• Other non-operating income was unchanged at $668 million as gains from the sale of minor brands and an increase in net non-operating benefits on postretirement plans were fully offset by a non-cash charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in certain Enterprise Markets, including Nigeria.

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• Interest expense was $907 million, a decrease of $18 million versus the prior year.

• Interest income was $469 million, a decrease of $4 million versus the prior year.

• Other non-operating income, net decreased $514 million to $154 million primarily driven by the higher non-cash charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina in the current year compared to the same charge due to the substantial liquidation of operations in Nigeria in the prior year.

The effective income tax rate for fiscal year ended June 30, 2025, was 20.3%, compared to 20.2% for the fiscal year ended June 30, 2024.

The increase in the effective tax rate was primarily driven by unfavorable geographic mix impacts, partially offset by decreases due to higher excess tax benefits of share-based compensation.

Earnings before income taxes increased $408 million, or 2%, to $18.8 billion due to the increase in operating income discussed above.

Net earnings increased $236 million, or 2%, to $15.0 billion due to the increase in earnings before income taxes, partially offset by the increase in the effective income tax rate discussed above.

The increase in the effective tax rate was primarily driven by the charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina, partially offset by favorable geographic mix impacts.

Earnings before income taxes increased $1.4 billion, or 7%, to $20.2 billion as the increase in operating income, the components of which are discussed above, were partially offset by the non-cash charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina.

Net earnings increased $1.1 billion, or 7%, to $16.1 billion due to the increase in earnings before income taxes, partially offset by the effective income tax rate increase discussed above.

Foreign exchange impacts reduced net earnings by approximately $45 million due to a weakening of certain currencies against the U.S.

This impact includes both transactional charges and translational impacts from converting earnings from foreign subsidiaries to U.S.

Net earnings attributable to Procter & Gamble increased $226 million, or 2%, to $14.9 billion.

Net earnings attributable to Procter & Gamble increased $1.1 billion, or 7%, to $16.0 billion.

Diluted EPS increased $0.49, or 8%, to $6.51 due primarily to the increase in net earnings.

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Segment results reflect information on the same basis we use for internal management reporting and performance evaluation.

The results of these reportable segments do not include certain non-business unit specific costs which are reported in our Corporate segment and are included as part of our Corporate segment discussion.

The results of these reportable segments do not include certain non-business unit specific costs which are reported in Corporate and are included as part of the Corporate discussion.

Additionally, we apply blended statutory tax rates in the segments.

Eliminations to adjust segment results to arrive at our consolidated effective tax rate are included in Corporate.

See Note 2 to the Consolidated Financial Statements for additional information on items included in the Corporate segment.

See Note 2 to the Consolidated Financial Statements for additional information on items included in Corporate.

Net Sales Change Drivers 2025 vs.

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% of net sales 18.1% 19.5% (140) bps

Beauty net sales increased 1% to $15.2 billion as the positive impact of higher pricing of 4% was partially offset by unfavorable foreign exchange of 2% and an unfavorable mix of 1% (due primarily to the decline of the super-premium SK-II brand, which has higher than segment-average selling prices).

Unit volume was unchanged.

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Beauty net sales decreased 2% to $15.0 billion as the negative impact of unfavorable mix of 2% (due primarily to the decline of the super-premium SK-II brand, which has higher than segment-average selling prices), unfavorable foreign exchange of 1% and a unit volume decrease of 1% was partially offset by the positive impact of higher pricing of 2%.

Excluding the impact of acquisitions and divestitures and foreign exchange, organic sales increased 1%.

Global market share of the Beauty segment increased 0.1 points.

• Hair Care net sales increased mid-single digits.

Positive impacts of higher pricing (driven by Latin America, Europe and North America), a net benefit from acquisitions and divestitures and favorable brand mix (due to growth of the premium Native brand) were partially offset by negative impacts of unfavorable foreign exchange.

Unit volume was unchanged as growth in Latin America (due to market growth), North America and Asia Pacific (both due to innovation) was offset by a decline in Greater China (due to market contraction and distribution footprint changes).

Organic sales increased high single digits due to an approximately 30% growth in Latin America, double-digit increases in North America and Europe, partially offset by a mid-single-digit decline in Greater China.

Global market share of the Beauty segment decreased 0.3 points.

• Hair Care net sales decreased low single digits.

Positive impacts of favorable product mix and higher pricing (driven by Latin America, Europe and North America) were partially offset by negative impacts of divestitures, unfavorable foreign exchange and a unit volume decline.

The unit volume decline was driven by a decline in Greater China (due to market contraction and the impact of divestitures), partially offset by increases in Latin America and Europe (both due to market growth).

Organic sales increased low single digits due to double-digit growth in Latin America, mid-single-digit growth in Europe and low single-digit growth in North America, partially offset by a high single-digit decline in Greater China.

Global market share of the hair care category decreased 0.9 points.

• Skin and Personal Care net sales decreased low single digits.

Negative impacts of unfavorable mix (due to the decline of the super-premium SK-II brand, which has higher than category-average selling prices) and unfavorable foreign exchange

22 The Procter & Gamble Company

were partially offset by the positive impacts of higher pricing (across all regions) and an increase in unit volume.

The unit volume increase was driven by growth in North America and Europe (both due to innovation in Personal Care), partially offset by a decline in Greater China (due to the decline of the super-premium SK-II brand and market contraction).

Organic sales decreased low single digits due to mid-teen declines in Asia Pacific and Greater China, partially offset by a double-digit increase in North America.

Global market share of the skin and personal care category increased 0.3 points.

Net earnings decreased 7% to $3.0 billion as the increase in net sales was more than offset by a 170 basis-point decline in net earnings margin.

Net earnings margin decreased as an increase in gross margin was more than fully offset by an increase in SG&A as a percentage of net sales and a higher effective tax rate.

The gross margin improvement was driven by productivity savings and increased pricing, partially offset by negative product mix (due primarily to the decline of the super-premium SK-II brand).

SG&A as a percentage of net sales increased due to an increase in marketing and overhead spending, partially offset by the positive scale effects of the net sales increase.

The higher effective tax rate was driven by unfavorable geographic mix.

• Personal Care net sales increased high single digits due to a unit volume increase and the positive impacts of higher pricing (driven by North America), partially offset by negative impacts of unfavorable foreign exchange.

The unit volume increase was driven by growth in North America (due to innovation), Europe (due to distribution expansion and innovation) and Latin America (due to market growth), partially offset by a decline in Greater China (due to market contraction).

Organic sales increased high single digits due to a more than 20% increase in Europe, a high-teens increase in Latin America and a high single-digit increase in North America, partially offset by a mid-single-digit decrease in Greater China.

Global market share of the personal care category increased 0.5 points.

• Skin Care net sales decreased high single digits.

A unit volume decrease and negative impacts of unfavorable product mix were partially offset by the positive impacts of higher pricing (driven by Greater China and Asia Pacific).

The unit volume decrease was driven by a decline in North America (due to distribution losses).

Organic sales also decreased high single digits due to mid-teens declines in North America and Asia Pacific and a low single-digit decline in Greater China.

Global market share of the skin care category decreased 0.7 points.

Net earnings decreased 8% to $2.7 billion due to the decrease in net sales and a 140 basis-point decline in net earnings margin.

Net earnings margin decreased due to a decrease in gross margin and an increase in SG&A as a percentage of net sales, partially offset by a lower effective tax rate.

The gross margin decline of 130 basis points was driven by unfavorable product mix (due to the decline of the super-premium SK-II brand) and higher commodities, partially offset by increased productivity savings.

SG&A as a percentage of net sales increased due to an increase in overhead spending and a reduction in net sales.

The lower effective tax rate was driven by favorable geographic mix.

($ millions) 2025 2024 Change vs.

3 unchanged sentences

% of net sales 23.7% 22.2% 150 bps

Grooming net sales increased 4% to $6.7 billion driven by higher pricing of 8% (driven primarily by Latin America and Europe) and a 1% increase in unit volume, partially offset by unfavorable foreign exchange of 5%.

Mix had a neutral impact on net sales growth.

The increase in unit volume was due to growth in IMEA and Latin America (both due to innovation), partially offset by decline in Europe (due to increased pricing).

Excluding the impact of acquisitions and divestitures and foreign exchange, organic sales increased 9% driven by an approximately 40% growth in Latin America and high single-digit growth in Europe, partially offset by a low single-digit decline in North America.

Global market share of the Grooming segment increased 0.5 points.

Net earnings increased 1% to $1.5 billion due to the increase in net sales, partially offset by a 60 basis-point decrease in net earnings margin.

Net earnings margin declined as an increase in gross margin was more than fully offset by an increase in SG&A as a percentage of net sales.

The gross margin increase was driven by higher pricing and productivity savings, partially offset by unfavorable foreign exchange and unfavorable mix due to the growth of premium innovation that has lower than segment-average gross margins.

SG&A as a percentage of net sales increased due to an increase in marketing spending, partially offset by the positive scale effects of the net sales increase.

Grooming net sales were unchanged at $6.7 billion driven by a 2% increase in unit volume and higher pricing of 2% across all regions were offset by the negative impacts of unfavorable foreign exchange of 2%, unfavorable geographic mix of 1% and divestitures of 1%.

The unit volume increase was driven by growth in IMEA (due to increased distribution) and Europe (due to market growth), partially offset by a decline in North America (due to retail inventory reduction).

Excluding the impact of acquisitions and divestitures and foreign exchange, organic sales increased 2% driven by double-digit growth in Asia Pacific and IMEA and low single-digit growth in Europe, partially offset by a low single-digit decline in North America.

Global market share of the Grooming segment decreased 0.1 points.

Net earnings increased 7% to $1.6 billion due to a 150 basis-point improvement in net earnings margin.

Net earnings margin increased due to an increase in gross margin and a decrease in SG&A as a percentage of net sales.

The gross margin increase of 50 basis points was driven by productivity savings, partially offset by unfavorable geographic mix.

SG&A as a percentage of net sales decreased due to higher foreign exchange transactional charges in the prior year period.

($ millions) 2025 2024 Change vs.

3 unchanged sentences

% of net sales 20.3% 19.1% 120 bps

Health Care net sales increased 5% to $11.8 billion driven by higher pricing of 4% and favorable mix of 2% (due to growth in North America and Europe, both of which have higher than segment-average selling prices), partially offset by a 1% decrease in unit volume.

Excluding the impact of foreign exchange and acquisitions and divestitures, organic sales also increased 5%.

Health Care net sales increased 2% to $12.0 billion driven by favorable geographic mix of 3% (due to growth in North America and Europe, both of which have higher than segment-average selling prices) and higher pricing of 1%, partially offset by

The Procter & Gamble Company 23

unfavorable foreign exchange of 1% and a 1% decrease in unit volume.

Excluding the impact of foreign exchange and acquisitions and divestitures, organic sales increased 3%.

Global market share of the Health Care segment increased 0.2 points.

• Oral Care net sales increased mid-single digits due to the positive impacts of favorable product mix (due to growth of premium paste and power brushes, which have higher than category-average selling prices) and higher pricing (driven by Latin America, Europe and North America), partially offset by a decrease in unit volume.

The unit volume decrease was due to a decline in Latin America and Greater China (both due to share losses) partially offset by growth in North America and Europe (both due to market growth).

Organic sales also increased mid-single digits due to a double-digit increase in Europe and a mid-single-digit increase in North America partially offset by a low single-digit decline in Greater China.

• Oral Care net sales increased low single digits due to the positive impacts of favorable product mix (due to growth of premium paste and power brushes, which have higher than category-average selling prices), partially offset by a decrease in unit volume and unfavorable foreign exchange.

The unit volume decrease was due to a decline in Greater China (due to market contraction and increased competitive activity) and IMEA (due to share losses), partially offset by growth in North America (due to market growth and innovation).

Organic sales increased low single digits due to a high single-digit increase in Europe and a low single-digit increase in North America, partially offset by a mid-teens decline in Greater China.

Global market share of the oral care category increased 0.1 points.

• Personal Health Care net sales increased mid-single digits due to the positive impacts of higher pricing (driven by North America, Latin America and Europe) and favorable foreign exchange, partially offset by unfavorable mix (due to the decline of respiratory products that have higher than category-average selling prices) and a decrease in unit volume.

The unit volume decrease was due to declines in Latin America and IMEA (both due to market contraction including lower cough and cold incidence), partially offset by growth in North America (due to innovation).

Organic sales increased low single digits due to mid-single-digit growth in Europe and North America, partially offset by a low single-digit decline in Asia Pacific.

• Personal Health Care net sales increased low single digits due to the positive impacts of higher pricing (driven by Latin America and Europe), favorable product mix and a unit volume increase, partially offset by unfavorable foreign exchange.

The unit volume increase was due to increases in North America (due to share growth) and Latin America (due to market growth).

Organic sales increased mid-single digits due to double-digit growth in Latin America, mid-single-digit growth in Europe and low single-digit growth in North America.

Global market share of the personal health care category increased 0.2 points.

The Procter & Gamble Company 23

Net earnings increased 8% to $2.4 billion due to the increase in net sales and a 120 basis-point increase in net earnings margin.

Net earnings margin increased due to an increase in gross margin, partially offset by an increase in SG&A as a percentage of net sales.

The gross margin increase was driven by higher pricing and productivity savings, partially offset by unfavorable product mix (due to a decline in respiratory products, which have higher than segment-average gross margins).

SG&A as a percentage of net sales increased due to increased marketing spending, partially offset by the positive scale impacts of the net sales increase.

Net earnings margin increased due to an increase in gross margin and a decrease in SG&A as a percentage of net sales.

The gross margin increase of 60 basis points was driven by productivity savings, partially offset by unfavorable geographic mix.

SG&A as a percentage of net sales decreased due to decreased marketing spending, partially offset by an increase in overhead spending.

FABRIC & HOME CARE

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% of net sales 19.7% 19.3% 40 bps

Fabric & Home Care net sales increased 4% to $29.5 billion driven by higher pricing of 3%, favorable mix of 1% and a 1% increase in unit volume, partially offset by unfavorable foreign exchange of 1%.

Fabric & Home Care net sales were unchanged at $29.6 billion driven by favorable product mix of 1%, offset by unfavorable foreign exchange of 1%.

Unit volume was unchanged.

Excluding the impact of foreign exchange and acquisitions and divestitures, organic sales increased 2%.

Global market share of the Fabric & Home Care segment was unchanged.

• Fabric Care net sales increased low single digits driven by the positive impacts of higher pricing (driven by Europe, Asia Pacific and Latin America, partially offset by increased trade spending in North America) and favorable geographic mix (due to disproportionate growth in North America, which has higher than category-average selling prices).

Unit volume was unchanged as growth in North America (due to increased marketing support and market growth) and Europe (due to innovation and increased marketing support) was offset by declines primarily in Asia Pacific (due to increased pricing) and Greater China (due to market contraction and portfolio rationalization).

Organic sales also increased low single digits driven by a high single-digit increase in Europe and a low single-digit increase in North America, partially offset by a mid-teens decline in Greater China.

Global market share of the Fabric & Home Care segment increased 0.1 points.

• Fabric Care net sales were unchanged as favorable premium product mix impacts was offset by unfavorable foreign exchange.

Unit volume was unchanged as growth in Europe and North America (both due to innovation) was offset by declines in Greater China and Asia Pacific (both due to market contraction).

Organic sales increased low single digits driven by low single-digit increases in North America and Europe, partially offset by a high single-digit decline in IMEA.

Global market share of the fabric care category decreased 0.1 points.

• Home Care net sales increased high single digits.

Positive impacts of higher pricing (driven primarily by Europe and North America), a unit volume increase and favorable premium product mix were partially offset by unfavorable foreign exchange.

The unit volume increase was due to growth in North America and Europe (both due to innovation), partially offset by decline in Latin America (due to increased pricing).

Organic sales increased high single digits driven by mid-teens growth in Europe and a high single-digit growth in North America.

• Home Care net sales increased low single digits.

Positive impacts of favorable premium product mix and a unit volume increase were partially offset by negative impacts of unfavorable foreign exchange.

The unit volume increase was due to growth in North America (due to innovation) and Europe (due to market growth).

Organic sales increased low single digits driven by low single-digit growth in North America and Europe.

Global market share of the home care category increased 0.4 points.

Net earnings increased 18% to $5.7 billion due to the increase in net sales and a 230 basis-point improvement in net earnings margin.

Net earnings margin increased due to an increase in gross margin, partially offset by an increase in SG&A as a percentage of net sales.

The gross margin increase was driven by productivity savings, lower commodity costs and higher pricing.

SG&A as a percentage of net sales increased due primarily to an increase in marketing spending, partially offset by the positive scale effects of the net sales increase.

Net earnings increased 3% to $5.8 billion due to a 40 basis-point improvement in net earnings margin.

Net earnings margin increased due to a decrease in SG&A as a percentage of net sales, partially offset by a decline in gross margin.

Gross margin decreased 10 basis points as positive impacts from increased productivity savings were more than offset by negative impacts from unfavorable geographic and product mix and higher commodity costs.

SG&A as a percentage of net sales decreased due to a reduction in marketing spending.

BABY, FEMININE & FAMILY CARE

4 unchanged sentences

% of net sales 19.8% 19.8% 0 bps

Baby, Feminine & Family Care net sales were unchanged at $20.3 billion as the positive impacts of higher pricing of 3% and favorable mix of 1% (due to a higher proportion of sales in North America, which has higher than segment-average selling prices) were offset by a 2% decrease in unit volume and unfavorable foreign exchange of 2%.

Baby, Feminine & Family Care net sales were unchanged at $20.2 billion as favorable product mix of 1% was offset by unfavorable foreign exchange of 1%.

Unit volume was unchanged.

Excluding the impact of foreign exchange and acquisitions and divestitures, organic sales increased 1%.

Global market share of the Baby, Feminine & Family Care segment decreased 0.2 points.

• Baby Care net sales decreased low single digits.

Negative impacts of a decrease in unit volume and unfavorable foreign exchange were partially offset by higher pricing (driven primarily by Latin America and Europe) and favorable product mix (due to a higher proportion of premium-priced diapers).

Volumes decreased in all regions led by Europe, IMEA and North America, due to increased pricing and competitive activity.

Organic sales decreased low single digits driven by a mid-single-digit decline in Europe partially offset by mid-teens growth in Latin America.

Global market share of the baby care category decreased 0.3 points.

• Feminine Care net sales increased low single digits.

Positive impacts of higher pricing (driven primarily by Europe, Latin America and IMEA) and favorable mix (due to a higher proportion of premium products) were partially offset by a decrease in unit volume and unfavorable foreign exchange.

The volume decrease was driven primarily by declines in

24 The Procter & Gamble Company

Europe (due to increased pricing), Latin America (due to increased competitive activity) and IMEA (due to increased pricing), partially offset by growth in North America (due to increased marketing support and distribution gains).

Organic sales increased mid-single digits driven by mid-single-digit increases in Europe and IMEA and a low single-digit increase in North America.

Market share of the feminine care category increased 0.2 points.

• Net sales in Family Care, which is predominantly a North American business, increased low single digits driven by a unit volume increase (due to market growth and increased marketing support) and higher pricing, partially offset by unfavorable product mix (due to growth of larger pack sizes with lower than category-average selling prices).

Organic sales also increased low single digits.

• Baby Care net sales decreased mid-single digits.

Negative impacts of a decrease in unit volume, unfavorable foreign exchange and divestitures were partially offset by favorable geographic and product mix (due to a higher proportion of premium-priced diapers).

Unit volume decreased across all regions (due to increased competitive activity, market contraction and distribution losses) except unit volume increased in Greater China (due to share gains).

Organic sales decreased low single digits driven by declines across all regions except for a double digit increase in Greater China and unchanged organic sales in Latin America.

Global market share of the baby care category decreased 0.1 points.

• Feminine Care net sales were unchanged.

Positive impacts of favorable geographic mix and higher pricing (driven primarily by North America) were partially offset by negative impacts of a decrease in unit volume and unfavorable foreign exchange.

The unit volume decrease was driven primarily by declines in Greater China (due to market contraction and competitive activity) and Latin America (due to share losses).

Organic sales increased low single digits driven by a mid-single-digit increase in North America, partially offset by a mid-single-digit decline in Greater China.

Market share of the feminine care category decreased 0.2 points.

• Net sales in Family Care, which is predominantly a North American business, increased low single digits driven by a unit volume increase (due to market growth).

Organic sales increased mid-single digits.

North America's share of the family care category decreased 0.2 points.

Net earnings increased 13% to $4.0 billion due to a 230 basis-point increase in net earnings margin.

Net earnings margin increased primarily due to an increase in gross margin, partially offset by an increase in SG&A as a percentage of net sales.

Gross margin increased primarily due to lower commodity costs, productivity savings and increased pricing, partially offset by unfavorable foreign exchange.

SG&A as a percentage of net sales increased due to an increase in marketing and overhead spending.

Net earnings was unchanged at $4.0 billion.

Net earnings margin was unchanged as a decrease in gross margin was offset by a decrease in SG&A as a percentage of net sales.

Gross margin decreased 60 basis points primarily due to higher commodity costs and unfavorable category mix, partially offset by productivity savings.

SG&A as a percentage of net sales decreased due to a reduction in marketing spending and higher foreign exchange transactional charges in the prior year period.

($ millions) 2025 2024 Change vs.

2 unchanged sentences

Corporate includes certain operating and non-operating activities not allocated to specific business segments.

These include but are not limited to incidental businesses managed at the corporate level, gains and losses related to certain divested brands or businesses, impacts from various financing and investing activities, impacts related to employee benefits, asset impairments and restructuring activities including manufacturing and workforce optimization.

These include but are not limited to incidental businesses managed at the corporate level, gains and losses related to certain divested brands or businesses, impacts from various financing and investing activities, certain impacts related to employee benefits, asset impairments and restructuring activities including manufacturing and workforce optimization.

Corporate also includes reconciling items to adjust the accounting policies used within the reportable segments to U.S.

The most notable ongoing reconciling item is income taxes, which adjusts the blended statutory rates that are reflected in the reportable segments to the overall Company effective tax rate.

Corporate net sales decreased $164 million to $601 million due to a decrease in net sales of incidental businesses managed at the corporate level.

Corporate net earnings decreased $1.0 billion due to a loss of $1.4 billion due primarily to the impairment charge of the Gillette intangible asset and incremental restructuring charges.

Corporate net sales increased 32% to $794 million due to an increase in net sales of incidental businesses managed at the corporate level.

Corporate net earnings increased $903 million to a loss of $527 million due primarily to the non-cash impairment charge of $1.3 billion ($1.0 billion after tax) on the Gillette intangible asset in the prior year, partially offset by incremental restructuring charges in the current year, comprised primarily of the non-cash charge of $752 million for accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina.

Restructuring Program to Deliver Productivity and Cost Savings

The Company has historically had an ongoing restructuring program with annual spending in the range of $250 to $500 million before tax.

On December 5, 2023, the Company announced an incremental limited market portfolio restructuring of its business operations, primarily in certain Enterprise Markets, including Argentina and Nigeria.

In fiscal 2024, the Company incurred before tax restructuring costs of $659 million, which include foreign currency translation losses recognized as a non-cash charge of approximately $216 million due to the substantial liquidation of operations in certain Enterprise Markets, including Nigeria.

In fiscal 2024, the Company announced an incremental limited market portfolio restructuring of its business operations, primarily in certain Enterprise Markets, including Argentina and Nigeria, and during the period ended September 30, 2024, the Company completed the limited market portfolio restructuring.

The total incremental restructuring charges incurred under the program were $1.2 billion after tax.

In fiscal 2025, the Company incurred before tax restructuring costs of $1.1 billion, which include the non-cash charge of $752 million for accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina.

Restructuring accruals of $189 million as of June 30, 2025, are classified as current liabilities.

Excluding the non-cash charges of foreign currency translation losses for certain Enterprise Markets, including Nigeria, approximately 64% of the restructuring charges incurred in fiscal 2024 either have been or will be settled with cash.

Excluding the non-cash charges of foreign currency translation losses for Argentina, approximately 74% of the restructuring charges incurred in fiscal 2025 either have been or will be settled with cash.

Consistent with our policies for restructuring-type activities, the resulting charges are funded by and included within Corporate for segment reporting.

6 unchanged sentences

Excess operating cash is used first to fund shareholder dividends.

Other discretionary uses include share repurchases and acquisitions to complement our portfolio of businesses, brands and geographies.

Other discretionary uses include share repurchases and acquisitions to

The Procter & Gamble Company 25

complement our portfolio of businesses, brands and geographies.

As necessary, we may supplement operating cash flow with debt to fund these activities.

The overall cash position of the Company reflects our strong business results and a global cash management strategy that takes into account liquidity management, economic factors and tax considerations.

The Procter & Gamble Company 25

Cash Flow Analysis

6 unchanged sentences

Operating Cash Flow

Operating cash flow was $19.8 billion in 2024, an 18% increase versus the prior year.

Net earnings, adjusted for certain non-cash items (depreciation and amortization, intangible asset impairment, share-based compensation expense, deferred income taxes and gain on sale of assets) generated approximately $19.3 billion of operating cash flow.

Working capital and other impacts generated $533 million of cash in the period primarily driven by an increase in trade payables and other non-cash add-backs, partially offset by an increase in accounts receivable and a decrease in post-retirement benefit accruals.

The increase in trade payables is primarily from increased marketing support activities and extended payment terms with suppliers, partially offset by lower supply chain payables due to a decrease in commodity costs.

Other non-cash add-backs include the non-cash charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in certain Enterprise Markets, including Nigeria.

The increase in Accounts Receivable is primarily from sales growth.

The decrease in post-retirement benefit accruals is due to payments and the net periodic credit from other retiree benefits.

Days sales outstanding increased by two days.

Days inventory on hand increased by two days.

Operating cash flow was $17.8 billion in 2025, a 10% decrease versus the prior year.

Net earnings, adjusted for certain non-cash items (depreciation and amortization, share-based compensation expense, deferred income taxes and loss on sale of assets) generated approximately $20.3 billion of operating cash flow.

Working capital and other impacts consumed $2.5 billion of cash in the period.

Accounts receivable decreased slightly resulting in $45 million of cash flow help.

Days sales outstanding were flat.

Total inventories increased, consuming $324 million of cash, driven primarily by increased safety stock levels and higher commodity costs.

These increased input costs and higher inventory levels resulted in a four-day increase in days on hand .

Accounts payable decreased, resulting in $542 million use of cash, primarily driven by marketing and overhead activities.

Other impacts reduced cash by $1.7 billion primarily driven by postretirement benefit impacts of $806, the payment of the transitional tax related to the 2017 U.S.

Tax Act of $562 and a reduction in compensation and marketing accruals.

Adjusted Free Cash Flow.

2 unchanged sentences

Adjusted free cash flow is one of the measures used to evaluate senior management and determine their at-risk compensation.

Adjusted free cash flow was $16.9 billion in 2024, an increase of 21% versus the prior year.

The increase was primarily driven by the increase in operating cash flows as discussed above.

Adjusted free cash flow productivity, defined as the ratio of adjusted free cash flow to net earnings excluding the Gillette intangible asset impairment charge and non-cash charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in certain Enterprise Markets, including Nigeria, was 105% in 2024.

Adjusted free cash flow was $14.6 billion in 2025, a decrease of 14% versus the prior year.

The decrease was primarily driven by the decrease in operating cash flows as discussed above.

Adjusted free cash flow productivity, defined as the ratio of adjusted free cash flow to net earnings excluding the non-cash charge for accumulated foreign currency translation losses due to the divestiture of operations in Argentina, was 87% in 2025.

Investing Cash Flow

Net investing activities used $3.5 billion of cash in 2024, primarily due to capital expenditures and the settlement of net investment hedges.

Net investing activities used $3.8 billion of cash in 2025, primarily due to capital expenditures.

Financing Cash Flow

Net financing activities used $14.9 billion of cash in 2024, mainly due to dividends to shareholders, treasury stock purchases and a net debt decrease, partially offset by the impact of stock options and other.

Net financing activities used $14.0 billion of cash in 2025, mainly due to dividends to shareholders and treasury stock purchases, partially offset by the impact of stock options and other and a net debt increase.

At June 30, 2025, our current liabilities exceeded current assets by $10.7 billion, largely due to accounts payable, short-term borrowings and debt due within one year.

10 unchanged sentences

We maintain bank credit facilities to support our ongoing commercial paper program.

The current facility is an $8.0 billion facility split between a $3.2 billion five-year facility and a $4.8 billion 364-day facility, which expire in November 2028 and October 2024, respectively.

The current facility is an $8.0 billion facility split between a $3.2 billion five-year facility and a $4.8 billion 364-day facility, which expire in October 2029 and October 2025, respectively.

Both facilities can be extended for certain periods of time as specified in the terms of the credit agreement.

These facilities are currently undrawn and we anticipate that they will remain undrawn.

These credit facilities do not

These credit facilities do not have cross-default or ratings triggers, nor do they have material adverse events clauses, except at the time of signing.

26 The Procter & Gamble Company

have cross-default or ratings triggers, nor do they have material adverse events clauses, except at the time of signing.

In addition to these credit facilities, we have an automatically effective registration statement on Form S-3 filed with the SEC that is available for registered offerings of short- or long-term debt securities.

to these credit facilities, we have an automatically effective registration statement on Form S-3 filed with the SEC that is available for registered offerings of short- or long-term debt securities.

For additional details on debt, see Note 10 to the Consolidated Financial Statements.

44 unchanged sentences

Our annual tax rate is determined based on our income, statutory tax rates and the tax impacts of items treated differently for tax purposes than for financial reporting purposes.

Also inherent in determining our annual tax rate are judgments and assumptions

Also inherent in determining our annual tax rate are judgments and assumptions regarding the recoverability of certain deferred tax balances, primarily net operating loss and other carryforwards, and our ability to uphold certain tax positions.

The Procter & Gamble Company 27

regarding the recoverability of certain deferred tax balances, primarily net operating loss and other carryforwards, and our ability to uphold certain tax positions.

Realization of net operating losses and other carryforwards is dependent upon generating sufficient taxable income in the appropriate jurisdiction prior to the expiration of the carryforward periods, which involves business plans, planning opportunities and expectations about future outcomes.

43 unchanged sentences

Significant judgment is required to estimate the fair value of our goodwill reporting units and intangible assets.

Accordingly, we typically obtain the assistance of third-party valuation specialists for significant goodwill reporting units and intangible assets.

Accordingly, we typically obtain the assistance of third-party valuation specialists for those goodwill reporting units and intangible assets that do not have fair values that significantly exceed their underlying carrying values.

Determining the useful life of an intangible asset also requires judgment.

Certain brand intangible assets are expected to have

28 The Procter & Gamble Company

indefinite lives based on their history and our plans to continue to support and build the acquired brands.

Certain brand intangible assets are expected to have indefinite lives based on their history and our plans to continue to support and build the acquired brands.

Other acquired intangible assets (e.g., certain brands, customer relationships, patents and technologies) are expected to have determinable useful lives.

Our assessment as to brands that have an indefinite life and those that have a determinable life is based on a number of factors including competitive environment, market share, brand history, underlying product life cycles, operating plans and the macroeconomic environment of the countries in which the brands are sold.

Our assessment as to brands that have

28 The Procter & Gamble Company

an indefinite life and those that have a determinable life is based on a number of factors including competitive environment, market share, brand history, underlying product life cycles, operating plans and the macroeconomic environment of the countries in which the brands are sold.

Determinable-lived intangible assets are amortized to expense over their estimated lives.

6 unchanged sentences

Other than our Gillette indefinite-lived intangible asset, our goodwill reporting units and our indefinite-lived intangible assets have fair values that significantly exceed their underlying carrying values.

During the fiscal year ended June 30, 2024, we determined the fair value of the Gillette indefinite-lived intangible asset was less than its carrying value.

As a result, we recorded a non-cash impairment charge of $1.3 billion ($1.0 billion after tax) to reduce the carrying amount to be equivalent to the estimated fair value.

As of June 30, 2024, the carrying value of the Gillette indefinite-lived intangible asset was $12.8 billion.

As previously disclosed, we recorded a non-cash impairment charge of $1.3 billion ($1.0 billion after tax) on the Gillette indefinite-lived intangible asset during the fiscal year ended June 30, 2024.

The impairment charge arose due to a higher discount rate, weakening of several currencies relative to the U.S.

dollar and the impact of a new restructuring program focused primarily in certain Enterprise Markets, including Argentina and Nigeria.

While we have concluded that no triggering event has occurred during the quarter ended June 30, 2024, the Gillette indefinite-lived intangible asset is susceptible to future impairment risk.

Adverse changes in the business or in the macroeconomic environment including foreign currency devaluation, increasing global inflation, or market contraction from an economic recession, could reduce the underlying cash flows used to estimate the fair value of the Gillette indefinite-lived intangible asset and trigger a future impairment charge.

Following the impairment charge, the carrying value of the Gillette indefinite-lived intangible asset was equivalent to the estimated fair value as of December 31, 2023.

Based on our impairment testing performed during the three months ended December 31, 2024, the Gillette indefinite-lived intangible asset's fair value exceeds its carrying value by greater than 10%.

As of June 30, 2025, the carrying value of the Gillette indefinite-lived intangible asset was $12.8 billion.

The most significant assumptions utilized in the determination of the estimated fair value of the Gillette indefinite-lived intangible asset are the net sales growth rates (including residual growth rates), discount rate and royalty rates.

7 unchanged sentences

dollar or an increased competitive environment.

The discount rate, which is consistent with a weighted average cost of capital that is likely to be expected by a market participant, is based upon industry required rates of return, including consideration of both debt and equity components of the capital structure.

The discount rate is based on a weighted average cost of capital that is likely to be expected by a market participant, including consideration of both debt and equity components of the capital structure.

Our discount rate may be impacted by adverse changes in the macroeconomic environment, volatility in the equity and debt markets or other country specific factors, such as further devaluation of currencies against the U.S.

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We performed a sensitivity analysis for the Gillette indefinite-lived intangible asset as part of our annual impairment testing during the three months ended December 31, 2024, utilizing reasonably possible changes in the assumptions for the discount rate, the short-term and residual growth rates and the royalty rates to demonstrate the potential impacts to the estimated fair values.

The table below provides, in isolation, the estimated fair value impacts related to a 25 basis-point increase in the discount rate, a 25 basis-point decrease in our shorter-term and residual growth rates, or a 50 basis-point decrease in our royalty rates, which may result in an additional impairment of the Gillette indefinite-lived intangible asset.

The Procter & Gamble Company 29

Approximate Percent Change in Estimated Fair Value

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See Note 4 to the Consolidated Financial Statements for additional discussion on goodwill and intangible assets.

The Procter & Gamble Company 29

New Accounting Pronouncements

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We evaluate exposures on a centralized basis to take advantage of natural exposure correlation and netting.

We leverage the Company's diversified portfolio of exposures as a natural hedge and prioritize operational hedging activities over financial market instruments.

We leverage the Company's diversified portfolio of exposures as a natural hedge and prioritize these operational hedging activities over financial market instruments.

To the extent we choose to further manage volatility within our financing operations, as discussed below, we enter into various financial transactions which we account for using the applicable accounting guidance for derivative instruments and hedging activities.

29 unchanged sentences

These measures may be useful to investors, as they provide supplemental information about business performance and provide investors with a view of our business results through the eyes of management.

These measures are also used to evaluate senior management and are a factor in determining their at-

30 The Procter & Gamble Company

risk compensation.

These measures are also used to evaluate senior management and are a factor in determining their at-risk compensation.

These non-GAAP measures are not intended to be considered by the user in place of the related GAAP measures but rather as supplemental information to our business results.

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Organic sales growth is a non-GAAP measure of sales growth excluding the impacts of acquisitions, divestitures and foreign exchange from year-over-year comparisons.

We believe this measure provides investors with a supplemental understanding of underlying sales trends by providing sales growth on a consistent basis.

We believe this measure provides investors with a

30 The Procter & Gamble Company

supplemental understanding of underlying sales trends by providing sales growth on a consistent basis.

This measure is used in assessing the achievement of management goals for at-risk compensation.

The following tables provide a numerical reconciliation of organic sales growth to reported net sales growth:

The following tables provide a numerical reconciliation of net sales growth to organic sales growth:

Fiscal year ended June 30, 2025

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Adjusted Free Cash Flow Productivity.

Adjusted free cash flow productivity is defined as the ratio of adjusted free cash flow to net earnings excluding the Gillette intangible asset impairment charge and non-cash charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in certain Enterprise Markets, including Nigeria.

Adjusted free cash flow productivity is defined as the ratio of adjusted free cash flow to net earnings excluding the non-cash charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in certain Enterprise Markets, including Nigeria and Argentina, and the Gillette intangible asset impairment charge.

We view adjusted free cash flow productivity as a useful measure to help investors understand P&G’s ability to generate cash.

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2024 $ 16,946 $ 14,974 $ 1,242 $ 16,216 105 %

(1) Adjustments to Net Earnings relate to the after-tax Gillette intangible asset impairment charge ($1.0 billion) and non-cash charge for accumulated foreign currency translation losses ($216) due to the substantial liquidation of operations in certain Enterprise Markets, including Nigeria.

(1) Adjustments to Net Earnings relate to a non-cash charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina in fiscal 2025 and certain Enterprise Markets, including Nigeria, in fiscal 2024, and the after-tax Gillette intangible asset impairment charge in fiscal 2024.

Core EPS is a measure of the Company's diluted EPS excluding items that are not judged by management to be part of the Company's sustainable results or trends.

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The Company has historically had an ongoing level of restructuring activities of approximately $250 - $500 million before tax.

On December 5, 2023, the Company announced a limited market portfolio restructuring of its business operations, primarily in certain Enterprise Markets, including Argentina and Nigeria.

As discussed in Note 3 to the Consolidated Financial Statements, in the fiscal year ended June 30, 2024, the Company started a limited market portfolio restructuring of its business operations, primarily in certain Enterprise Markets, including Argentina and Nigeria, to address challenging macroeconomic and fiscal conditions.

During the period ended September 30, 2024, the Company completed this limited market portfolio restructuring with the substantial liquidation of its operations in Argentina.

The adjustment to Core earnings includes the restructuring charges that exceed the normal, recurring level of restructuring charges.

The Procter & Gamble Company 31

• Intangible asset impairment:

As discussed in Note 4 to the Consolidated Financial Statements, in the fiscal year ended June 30, 2024, the Company recognized a non-cash, after-tax impairment charge of $1.0 billion ($1.3 billion before tax) to adjust the carrying value of the Gillette intangible asset acquired as part of the Company's 2005 acquisition of The Gillette Company.

We do not view the above items to be part of our sustainable results, and their exclusion from core earnings measures provides

a more comparable measure of year-on-year results.

These items are also excluded when evaluating senior management in

determining their at-risk compensation.

The Procter & Gamble Company 31

tax) to adjust the carrying value of the Gillette intangible asset acquired as part of the Company's 2005 acquisition of The Gillette Company.

We do not view the above items to be part of our sustainable results, and their exclusion from Core earnings measures provides a more comparable measure of year-on-year results.

These items are also excluded when evaluating senior management in determining their at-risk compensation.

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

Reconciliation of Non-GAAP Measures

Fiscal Year Ended June 30, 2024 Fiscal Year Ended June 30, 2023

Amounts in millions except per share amounts As Reported (GAAP) Incremental Restructuring Intangible Impairment Core

(Non-GAAP) As Reported

Fiscal Year Ended June 30, 2025

Amounts in millions except per share amounts As Reported (GAAP) Incremental Restructuring Core

Cost of products sold $ 41,164 $ 20 $ 41,184

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$ 6.51 $ 0.33 $ 6.83

(1) For the fiscal year ended June 30, 2023, there were no adjustments to or reconciling items for Core EPS.

(1) Diluted net earnings per common share are calculated on Net earnings attributable to Procter & Gamble.

CHANGE VERSUS YEAR AGO

Diluted net earnings per common share 8 %

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

Reconciliation of Non-GAAP Measures

Fiscal Year Ended June 30, 2024

Amounts in millions except per share amounts As Reported (GAAP) Incremental Restructuring Intangible Impairment Core

Cost of products sold $ 40,848 $ (70) $ — $ 40,778

Selling, general and administrative expense 23,305 (33) — 23,273

Operating income 18,545 103 1,341 19,988

Non-operating income, net 668 248 — 916

Income taxes 3,787 (25) 315 4,077

Net earnings attributable to P&G 14,879 376 1,026 16,281

Core net earnings attributable to P&G 11 %

Diluted net earnings per common share (1)

Core EPS 12 %

$ 6.02 $ 0.15 $ 0.42 $ 6.59

(1) Diluted net earnings per common share are calculated on Net earnings attributable to Procter & Gamble.

Quantitative and Qualitative Disclosures About Market Risk.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis