What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-08-04 compared with 2025-08-04 · 218 added, 212 removed, 565 unchanged (43% of the section changed)

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(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, pensions and healthcare;

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(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, social or environmental practices or similar matters that may arise;

(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, cyber incidents, supply chain practices, social or environmental 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;

(11) the ability to rely on and maintain key company and third-party information and operational technology systems, networks and services and maintain the security and functionality of such systems, networks and services and the data contained therein;

(12) the ability to successfully manage the demand, supply and operational challenges, as well as governmental responses or mandates, associated with a disease outbreak, including epidemics, pandemics or similar widespread public health concerns;

(13) the ability to stay on the leading edge of innovation, obtain necessary intellectual property protections and successfully respond to changing consumer habits, evolving digital marketing and selling platform requirements and technological advances attained by, and patents granted to, competitors;

(12) the ability to successfully manage demand, supply and operational challenges;

(13) the ability to stay on the leading edge of innovation, obtain necessary intellectual property protections and successfully respond to changing consumer habits, evolving and more fragmented digital marketing and selling platform requirements and technological advances attained by, and patents granted to, competitors;

(14) the ability to successfully manage our ongoing acquisition, divestiture and joint venture activities, in each case to achieve the Company’s overall business strategy and financial objectives, without impacting the delivery of base business objectives;

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P&G is a global leader in the fast-moving consumer goods industry, focused on providing branded consumer packaged goods of superior quality and value to our consumers around the world.

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.

Our products are sold in about 180 countries and territories primarily through mass merchandisers, digital 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 consumers.

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

We have on-the-ground operations in approximately 65 countries.

Our market environment is highly competitive with global, regional and local competitors.

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(1) Percent of Net sales and Net earnings for the fiscal year ended June 30, 2026 (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:

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

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Our appliances, such as electric shavers and intense pulse light devices, are sold primarily under the Braun brand.

We hold over 25% of the male electric shavers market.

We hold nearly 30% of the male electric shavers market.

We compete in oral care and personal health 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 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 are the global market leader in the feminine care category with nearly 30% global market share.

We compete in the menstrual care sub-category primarily behind our Always and Tampax brands with nearly 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.

Our family care business is predominantly a

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North American business comprised primarily of the Bounty paper towel and Charmin toilet paper brands.

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

Enterprise Markets

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We are improving operational effectiveness and organizational culture through enhanced clarity of roles and responsibilities, accountability and incentive compensation programs.

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 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.

The Company expects the delivery of the following long-term growth algorithm will result in total shareholder returns in the top third of the competitive, fast-moving consumer goods peer group:

The Company’s strategic framework has been delivering strong results over an extended period of time.

As we observe changes in the markets in which we operate, we will adapt the execution of our core strategy.

These market changes include evolving ways in which consumers are engaging with our brands across social media platforms, streaming services or AI based search.

We observe changes in retail landscapes around the world, where retailers are selling across multiple platforms (digital and physical outlets) and building their own media platforms.

Consumers are changing how they perceive value across their basket of goods as cumulative inflation impacts their shopping behavior.

Lastly, technologies, including AI, offer new capabilities to innovate, produce and market our products and brands.

We are embracing these changes, and to benefit from them, the Company can and will adjust the execution of its strategy.

Beyond the short-term interventions, the Company expects the delivery of the following long-term growth algorithm will result in total shareholder returns in the top third of the competitive, fast-moving consumer goods peer group:

• 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;

• Adjusted free cash flow productivity of 90% or greater.

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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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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.

Restructuring charges above the normal ongoing level of restructuring costs were reported as non-core charges.

For more details on the restructuring program, refer to Note 3 to the Consolidated Financial Statements.

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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.

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

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.

The Company incurred over half of the costs under this plan in fiscal 2026, with the remainder expected in fiscal 2027.

The restructuring activities are being 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.

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

Restructuring charges above the normal ongoing level of restructuring costs are reported as non-core charges.

For more details on the restructuring program, refer to Note 3 to the Consolidated Financial Statements.

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.

In January 2026, the Glad joint venture agreement between the Company and The Clorox Company (Clorox) expired.

Under the terms of the agreement, Clorox purchased the Company’s minority interest in the venture at fair market value for $476 million.

This transaction was accounted for as a dissolution of the Glad joint venture business and the Company recorded an after-tax gain of $261 million.

On February 20, 2026, the U.S.

Supreme Court ruled that the tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were invalid.

The Company previously paid approximately $200 million in IEEPA tariffs that may be recoverable.

During the three-month period ended June 30, 2026, the Company recognized recovery of half of this amount in its Consolidated Financial Statements.

Thorne Acquisition

On August 4, 2026, the Company entered into an agreement to acquire Thorne, a premium wellness and supplement brand in the vitamins, minerals and supplements category for $3.8 billion.

We anticipate the transaction to close in the second quarter of fiscal year 2027, with the timing subject to regulatory approval and customary closing conditions.

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SUMMARY OF 2026 RESULTS

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Cash flow from operating activities 19,556 17,817 10 %

• 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.

• Net sales increased 3% to $87.0 billion versus the prior year.

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

Organic sales, which exclude the impact of acquisitions and divestitures and foreign exchange, increased 1%.

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

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

Organic sales declined low single digits in Baby, Feminine & Family Care.

• Operating income decreased $703 million, or 3%, to $19.7 billion as the net sales increase was more than offset by a decrease in operating margin.

• Net earnings increased $79 million to $16.1 billion as the decrease in operating income was offset by higher non-operating restructuring charges in the prior year, primarily driven by the non-cash charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina.

• Net earnings attributable to Procter & Gamble increased $72 million to $16.0 billion.

• Diluted EPS increased 2% to $6.62 due to an increase in net earnings and a reduction in shares outstanding.

Core EPS, which excludes the gain from the dissolution of the Glad joint venture business and incremental restructuring charges, increased 1% to $6.89.

• Cash flow from operating activities was $19.6 billion.

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Tax Act, was $15.8 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%.

◦ Adjusted free cash flow productivity, which is defined as adjusted free cash flow as a percentage of net earnings excluding the gain from the dissolution of the Glad joint venture business, was 100%.

ECONOMIC CONDITIONS AND UNCERTAINTIES

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

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.

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

Our Russia business accounted for 1% of consolidated net sales, net earnings and net assets as of June 30, 2026.

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We strive to implement, achieve and sustain cost improvement plans, including supply chain optimization and general overhead and workforce optimization.

Increased pricing in response to certain inflationary or cost increases may also offset portions of the cost impacts;

Increased pricing in response to certain inflationary or cost increases may also

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offset portions of the cost impacts;

however, such price increases may negatively impact product consumption.

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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, 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.

The key metrics included in the discussion of our consolidated results of operations include net sales, gross margin, selling, general and administrative expense (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.

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

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For a detailed discussion of the fiscal 2025 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, 2025 .

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 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 low single digits in all Sector Business Units.

Net sales increased 3% to $87.0 billion in fiscal 2026 driven by favorable foreign exchange of 2% and pricing of 1%.

Unit volume and mix were unchanged versus the prior year.

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

Organic sales, which exclude the impact of acquisitions and divestitures and foreign exchange, increased 1%.

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

Organic sales declined low single digits in Baby, Feminine & Family Care.

Operating Costs

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• 70 basis points of product and packaging investments,

• 60 basis points of higher restructuring costs,

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• 30 basis points of net tariff impact from higher costs and recognized recoveries,

• 20 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.

• 10 basis points of unfavorable foreign exchange impacts and

• 10 basis points of other items and rounding.

These decreases were partially offset by:

• 180 basis points of manufacturing productivity savings and

• 180 basis points of manufacturing productivity savings,

• 40 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.

Total SG&A increased 6% to $23.9 billion and increased 60 basis points to 27.5% as a percentage of net sales due primarily to an increase in marketing spending as a percentage of net sales.

• Marketing spending as a percentage of net sales increased 80 basis points due to an increase in marketing spending, partially offset by productivity savings.

• Overhead costs as a percentage of net sales were unchanged as wage inflation headwinds and restructuring spending were offset by productivity savings.

• Other operating expenses as a percentage of net sales were unchanged.

Productivity-driven cost savings delivered 160 basis points of benefit to SG&A as a percentage of net sales.

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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 income decreased $703 million, or 3%, to $19.7 billion as the increase in net sales was more than offset by the decrease in gross margin and increase in SG&A spending.

The operating margin decreased 160 basis points to 22.7% due primarily to the decrease in gross margin and increase in marketing spending.

Non-Operating Items

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• Interest income was $430 million, a decrease of $39 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.

• Other non-operating income/(expense), net increased $922 million to $1.1 billion primarily driven by the non-cash charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina in the prior year and the gain from the dissolution of the Glad joint venture business in the current year period.

The effective income tax rate for fiscal year ended June 30, 2026, was 20.8%, compared to 20.3% for the fiscal year ended June 30, 2025.

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.

The increase in the effective tax rate was primarily driven by lower excess tax benefits of share-based compensation in the current year and unfavorable geographic mix impacts, partially offset by a decrease from discrete impacts related to uncertain tax positions and the prior year charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina.

Earnings before income taxes increased $210 million, or 1%, to $20.4 billion as the increase in other non-operating income/(expense), net, the components of which are described above, were partially offset by the decrease in operating income.

Net earnings increased $79 million to $16.1 billion as the increase in earnings before income taxes was partially offset by the effective income tax rate increase discussed above.

Foreign exchange impacts increased net earnings by approximately $224 million due to a strengthening 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 $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.

Net earnings attributable to Procter & Gamble increased $72 million to $16.0 billion.

Diluted EPS increased $0.11, or 2%, to $6.62 due to an increase in net earnings and a reduction in shares outstanding.

SEGMENT RESULTS

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

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Net Sales Change Drivers 2026 vs.

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% of net sales 16.7% 18.1% (140) bps

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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%.

Beauty net sales increased 7% to $16.0 billion, driven by a unit volume increase of 4%, favorable foreign exchange of 2% and positive impact of higher pricing of 1%.

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

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.

• Hair Care net sales increased high single digits driven by positive impacts of a unit volume increase, favorable foreign exchange and innovation-based pricing (primarily in North America and Latin America), partially offset by unfavorable geographic mix.

The increase in unit volume was driven by growth in Latin America, Europe and Asia Pacific (all due to innovation), partially offset by a decline in North America (due to competitive activity).

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

Global market share of the hair care category decreased 0.5 points.

• 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.

• Personal Care net sales increased high single digits driven by positive impacts of a unit volume increase, favorable foreign exchange and higher pricing (primarily in North America), partially offset by unfavorable geographic mix.

The volume increase was across all regions, led by growth in Greater China, North America and Europe (all due to innovation).

Organic sales also increased high single digits led by high-teens growth in Europe and mid-single-digit growth in Greater China and North America.

Global market share of the personal care category increased 0.2 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.

• Skin Care net sales increased mid-single digits driven by positive impacts of favorable product mix (due primarily to the increase of the super-premium SK-II brand, which has higher than category-average selling prices) and favorable foreign exchange, partially offset by a unit volume decrease.

The volume decrease was driven by Greater China (due to competitive activity).

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

Global market share of the skin care category decreased 0.6 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.

Net earnings decreased 2% to $2.7 billion due to a 140 basis-point decline in net earnings margin, partially offset by an increase in net sales.

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

The gross margin decline of 100 basis points was driven by unfavorable product mix and higher commodity costs, partially offset by productivity savings.

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

($ millions) 2026 2025 Change vs.

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% of net sales 22.1% 23.7% (160) bps

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.

Grooming net sales increased 4% to $6.9 billion driven by the positive impacts of favorable foreign exchange of 3% and higher pricing (primarily in North America and Europe) of 2%, partially offset by a 1% decrease in unit volume.

The unit volume decrease was driven by declines in IMEA (due to distribution loss) and North America (due to market contraction), partially

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offset by a unit volume increase in Latin America (due to increased distribution).

Excluding the impact of acquisitions and divestitures and foreign exchange, organic sales increased 1% driven by low single-digit growth in Europe and North America, partially offset by a high single-digit decline in Asia Pacific.

Global market share of the Grooming segment decreased 0.4 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.

Net earnings decreased 3% to $1.5 billion due to a 160 basis-point decline in net earnings margin, partially offset by an increase in net sales.

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

The gross margin decrease of 90 basis points was driven by unfavorable product mix, partially offset by higher pricing and productivity savings.

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

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

($ millions) 2026 2025 Change vs.

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% of net sales 19.3% 20.3% (100) bps

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

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

Health Care net sales increased 4% to $12.5 billion driven by favorable foreign exchange of 3%, higher pricing of 2% and favorable product mix of 1%, partially offset by a 2% decrease in unit volume.

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

Global market share of the Health Care segment increased 0.4 points.

• 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 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.

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

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

Organic sales were unchanged as a low single-digit increase in Europe was offset by a mid-teens decrease in Greater China.

Global market share of the oral care category was unchanged.

• Personal Health Care net sales increased mid-single digits due to the positive impacts of higher pricing (driven by North America) and favorable foreign exchange, partially offset by a decrease in unit volume.

The unit volume decrease was driven by a decline in North America (due to lower average incidence of cough and cold), partially offset by an increase in IMEA (due to innovation).

Organic sales increased low single digits due to high single-digit growth in IMEA and Latin America, partially offset by low single-digit growth in North America and Europe.

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

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 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.

Net earnings decreased 1% to $2.4 billion due to a 100 basis-point decline in net earnings margin, partially offset by an increase in net sales.

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

The gross margin decrease of 30 basis points was driven by unfavorable product mix, partially offset by productivity savings and higher pricing.

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

FABRIC & HOME CARE

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% of net sales 18.6% 19.7% (110) bps

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%.

Fabric & Home Care net sales increased 2% to $30.3 billion driven by favorable foreign exchange of 1% and higher pricing 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 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 & Home Care segment was unchanged.

• Fabric Care net sales increased low single digits driven by favorable foreign exchange and favorable product mix.

Unit volume was unchanged as the volume increase in North America (due to innovation) and Latin America (due to market growth) was offset by the volume decrease in Europe (due to competitive activity).

Organic sales were unchanged as a mid-single-digit increase in Latin America and a low single-digit increase in North America were offset by a low single-digit decrease in Europe.

Global market share of the fabric care category decreased 0.4 points.

• 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.

• Home Care net sales increased low single digits driven by higher pricing (primarily in North America) and favorable foreign exchange.

Unit volume was unchanged as increases in Latin America and Asia Pacific (both due to innovation) were offset by a decline in North America (due to competitive activity).

Organic sales also increased low single digits as a

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high single-digit growth in Latin America was partially offset by low single-digit growth in Europe and North America.

Global market share of the home care category increased 0.3 points.

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.

Net earnings decreased 4% to $5.6 billion due to a 110 basis-point decline in net earnings margin, partially offset by an increase in net sales.

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

The gross margin decrease of 140 basis points was driven by unfavorable product mix and higher commodity costs, partially offset by productivity savings.

SG&A as a percentage of net sales decreased due primarily to a decrease in overhead spending as a percentage of net sales and lower foreign exchange transactional charges, partially offset by an increase in marketing spending.

BABY, FEMININE & FAMILY CARE

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% of net sales 19.3% 19.8% (50) bps

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%.

Baby, Feminine & Family Care net sales increased 1% to $20.4 billion driven by favorable foreign exchange of 2%, partially offset by a unit volume decrease of 1%.

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

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

24 The Procter & Gamble Company

• 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.

• Baby Care net sales increased low single digits driven by favorable foreign exchange and a unit volume increase.

The unit volume increase was driven by increases in Greater China (due to innovation) and IMEA (due to market growth), partially offset by a decrease in North America (due to competitive activity).

Organic sales also increased low single digits as a 20% increase in Greater China and a mid-single-digit increase in IMEA were partially offset by a low single-digit decrease in North America.

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

• Feminine Care net sales increased low single digits driven by positive impacts of favorable foreign exchange, favorable geographic mix and higher pricing (primarily in North America), partially offset by a decrease in unit volume.

The unit volume decrease was driven by IMEA and Europe (both due to competitive activity) and Greater China (due to market contraction).

Organic sales were unchanged as low single-digit growth in North America was offset by a high single-digit decline in IMEA and a low single-digit decline in Europe.

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.

• Net sales in Family Care, which is predominantly a North American business, decreased low single digits driven by lower pricing (due to merchandising investments) and a unit volume decrease (due to competitive activity).

Organic sales also decreased low single digits.

North America's share of the family care category decreased 0.7 points.

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.

Net earnings decreased 2% to $3.9 billion due to a 50 basis-point decline in net earnings margin, partially offset by an increase in net sales.

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

Gross margin decreased 40 basis points due to unfavorable category mix, partially offset by lower commodity costs and productivity savings.

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

($ millions) 2026 2025 Change vs.

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Corporate net sales increased 16% to $919 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.

Corporate net earnings increased $504 million to a loss of $23 million due to restructuring charges related to the substantial liquidation of operations in certain Enterprise Markets, including Argentina, in the prior year period and the dissolution of the Glad joint venture business in the current year period, partially offset by current year restructuring charges.

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.

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.

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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.

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

In fiscal 2026, the Company incurred incremental restructuring charges of $903 million after tax under the program.

Restructuring accruals of $336 million as of June 30, 2026, are classified as current liabilities.

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.

Approximately 67% of the before tax restructuring charges incurred in fiscal 2026 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.

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Excess operating cash is used first to fund shareholder dividends.

Other discretionary uses include share repurchases and acquisitions to

The Procter & Gamble Company 25

complement our portfolio of businesses, brands and geographies.

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

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

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Operating Cash Flow

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.

Operating cash flow was $19.6 billion in 2026, a 10% increase versus the prior year.

Net earnings, adjusted for certain non-cash items (depreciation and amortization, share-based compensation expense, deferred income taxes and (gain)/loss on sale of assets) generated approximately $19.5 billion of operating cash flow.

Working capital and other impacts generated $29 million of cash in the period.

Accounts receivable decreased, resulting in $84 million of cash flow help.

Days sales outstanding decreased by one day.

Total inventories increased, consuming $641 million of cash, driven primarily by increased safety stock levels and new product initiatives.

Days inventory on hand increased by two days .

Accounts payable increased, generating $919 million of cash, driven primarily by increased supply chain activity in line with the increase in inventory and increased marketing support activity.

Other impacts reduced cash by $333 million primarily driven by the final payment of the transitional tax related to the 2017 U.S.

Tax Act and a reduction in postretirement benefit accruals, partially offset by tax accruals in excess of estimated payments and accrued marketing expense.

Adjusted Free Cash Flow.

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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 $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.

Adjusted free cash flow was $15.8 billion in 2026, an increase of 8% 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 gain from the dissolution of the Glad joint venture business, was 100% in 2026.

Investing Cash Flow

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

Net investing activities used $4.6 billion of cash in 2026, primarily due to capital expenditures and the settlement of net investment hedges, partially offset by proceeds from the dissolution of the Glad joint venture business.

Financing Cash Flow

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.

Net financing activities used $14.5 billion of cash in 2026, mainly due to dividends to shareholders and treasury stock purchases, partially offset by the impact of stock options and other.

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At June 30, 2026, our current liabilities exceeded current assets by $12.5 billion, l argely due to accounts payable, short-term borrowings and debt due within one year.

We anticipate being able to support our short-term liquidity and operating needs largely through cash generated from operations.

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We utilize short- and long-term debt to fund discretionary items, such as acquisitions and share repurchases.

We have strong short- and long-term debt ratings, which have enabled and should continue to enable us to refinance our debt as it becomes due in commercial paper and bond markets.

We have strong short- and long-term debt ratings, that have enabled and should continue to enable us to refinance our debt as it becomes due in commercial paper and bond markets.

In addition, we have agreements with a diverse group of financial institutions that, if needed, should provide sufficient funding to meet short-term financing requirements.

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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

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.

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.

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

7 unchanged sentences

Leases 1,028 246 376 208 198

Tax Act transitional charge (1)

688 688 — — —

Interest payments relating to long-term debt 6,102 884 1,365 1,075 2,777

4 unchanged sentences

TOTAL CONTRACTUAL COMMITMENTS $ 45,843 $ 13,828 $ 7,667 $ 8,225 $ 16,123

(1) Represents the U.S.

federal tax liability associated with the repatriation provisions of the 2017 U.S.

(1) Represents future pension payments to comply with local funding requirements.

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These include revenue recognition, income taxes, certain employee benefits and goodwill and intangible assets.

We believe these accounting policies, and others set forth in Note 1 to the Consolidated Financial Statements, should be reviewed as they are integral to understanding the results of operations and financial condition of the Company.

We believe these

28 The Procter & Gamble Company

accounting policies, and others set forth in Note 1 to the Consolidated Financial Statements, should be reviewed as they are integral to understanding the results of operations and financial condition of the Company.

The Company has discussed the selection of critical accounting policies and the effect of estimates with the Audit Committee of the Company's Board of Directors.

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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

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.

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The expected return on plan assets assumption impacts our defined benefit expense since many of our defined benefit pension plans and our primary OPRB plan are partially funded.

The process for setting the expected rates of return is described in Note 8 to the Consolidated Financial Statements.

The process for setting the expected rates of return is described in Note

The Procter & Gamble Company 29

8 to the Consolidated Financial Statements.

For 2026, the average return on assets assumptions for pension plan assets and OPRB assets was 6.0% and 8.5%, respectively.

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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

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.

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.

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

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Goodwill and indefinite-lived intangible assets are not amortized but are tested at least annually for impairment.

We use the income method to estimate the fair value of these assets, which is based on forecasts of the expected future cash flows attributable to the respective assets.

When appropriate, the market approach, which leverages comparable company revenue and earnings multiples, is weighted with the income approach to estimate fair value.

If the resulting fair value is less than the asset's carrying value, that difference represents an impairment.

Our annual impairment testing for goodwill and indefinite-lived intangible assets occurs during the three months ended December 31.

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.

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.

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.

As previously disclosed, we recorded a non-cash impairment charge related to the Gillette indefinite-lived intangible asset during the fiscal year ended June 30, 2024.

For additional information regarding the impairment charge and related accounting, see Note 4 to the Consolidated Financial Statements.

Based on our impairment testing performed during the three months ended December 31, 2025, the Gillette indefinite-lived intangible asset's fair value exceeds its carrying value by greater than 10%.

As of June 30, 2026, the carrying value of the Gillette indefinite-lived intangible asset was $12.8 billion.

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 further impairment charge.

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.

While we have concluded that no triggering event has occurred since our annual impairment test, the Gillette indefinite-lived intangible asset is susceptible to 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 or geopolitical conflicts, could reduce the underlying cash flows used to estimate the fair value of the Gillette indefinite-lived intangible asset and result in a future impairment charge.

Net sales growth rates could be negatively impacted by reductions or changes in demand for our Gillette products, which may be caused by, among other things:

1 unchanged sentence

In addition, relative global and country/regional macroeconomic factors could result in additional and prolonged devaluation of other countries’ currencies relative to the U.S.

The residual growth rates represent the expected rate at which the Gillette brand is expected to grow beyond the shorter-term business planning period.

The residual growth rates utilized in our fair value estimates are consistent with the brand operating plans and approximates expected long-term category market growth rates.

The residual growth rates depend on overall market growth rates, the competitive environment, inflation, relative currency exchange rates and business activities that impact market share.

As a result, the residual growth rates could be adversely impacted by a sustained deceleration in category growth, grooming habit changes, devaluation of currencies against the U.S.

The residual growth rate represents the expected rate at which the Gillette brand is expected to grow beyond the shorter-term business planning period.

The residual growth rate utilized in our fair value estimates is consistent with the brand operating plans and approximates expected long-term category market growth rates.

The residual growth rate depends on overall market growth rates, the competitive environment, inflation, relative currency exchange rates and business activities that impact market share.

As a result, the residual growth rate could be adversely impacted by a sustained deceleration in category growth, grooming habit changes, devaluation of currencies against the U.S.

dollar or an increased competitive environment.

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Spot rates as of the fair value measurement date are utilized in our fair value estimates for cash flows outside the U.S.

30 The Procter & Gamble Company

The royalty rate used to determine the estimated fair value for the Gillette indefinite-lived intangible asset is driven by historical and estimated future profitability of the underlying Gillette business.

The royalty rate may be impacted by significant adverse changes in long-term operating margins.

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.

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, 2025, utilizing reasonably possible changes in the assumptions for the discount rate, the short-term and residual growth rates and the royalty rate to demonstrate the potential impacts to 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 short-term and residual growth rates or a 50 basis-point decrease in our royalty rate.

Approximate Percent Change in Estimated Fair Value

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Gillette indefinite-lived intangible asset (5)% (5)% (4)%

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

The Procter & Gamble Company 29

See Note 4 to the Consolidated Financial Statements for additional information on goodwill and intangible assets, including the recorded impairment charge discussed above.

New Accounting Pronouncements

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During the fiscal years ended June 30, 2026 and 2025, we did not have any financial commodity hedging activity.

The Procter & Gamble Company 31

Measures Not Defined By U.S.

8 unchanged sentences

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

30 The Procter & Gamble Company

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

We believe this measure provides investors with a 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.

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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 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.

Adjusted free cash flow productivity is defined as the ratio of adjusted free cash flow to net earnings excluding the gain from the dissolution of the Glad joint venture business in fiscal 2026 and the non-cash charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina in fiscal 2025.

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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2025 $ 14,606 $ 16,065 $ 752 $ 16,817 87 %

(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.

(1) Adjustments to Net Earnings relate to the gain from the dissolution of the Glad joint venture business in fiscal 2026 and the non-cash charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina in fiscal 2025.

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.

Management views this non-GAAP measure as a useful supplemental measure of Company performance over time.

Management views this non-GAAP measure as a useful supplemental measure

32 The Procter & Gamble Company

of Company performance over time.

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

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

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.

• 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

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.

As discussed in Note 3 to the Consolidated Financial Statements, during the period ended September 30, 2024, the Company completed its limited market portfolio restructuring with the substantial liquidation of its operations in Argentina.

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 incurred over half of the costs under this plan in fiscal 2026, with the remainder expected to be incurred in fiscal 2027.

The adjustments to Core earnings include the restructuring charges that exceed the normal, recurring level of restructuring charges.

• Glad joint venture agreement:

In January 2026, the Glad joint venture agreement between the Company and Clorox expired.

Under the terms of the agreement, Clorox purchased the Company’s minority interest in the venture at fair market value for $476 million.

This transaction was accounted for as a dissolution of the Glad joint venture business and the Company recorded an after-tax gain of $261 million.

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.

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Fiscal Year Ended June 30, 2026

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

Amounts in millions except per share amounts As Reported (GAAP) Incremental Restructuring Glad Joint Venture Agreement Core

Cost of products sold $ 43,362 $ (436) $ — $ 42,927

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Operating income 19,748 749 — 20,497

Non-operating income, net 154 789 943

Other non-operating income/(expense), net 1,076 161 (343) 894

Income taxes 4,233 6 (81) 4,158

Net earnings 16,144 904 (261) 16,786

Net earnings attributable to noncontrolling interests 98 1 — 98

Net earnings attributable to P&G 16,046 903 (261) 16,688

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Diluted net earnings per common share 2 %

The Procter & Gamble Company 33

THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES

1 unchanged sentence

Fiscal Year Ended June 30, 2025

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

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

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

1 unchanged sentence

Operating income 20,451 5 20,456

Non-operating income, net 668 248 — 916

Other non-operating income/(expense), net 154 789 943

Income taxes 4,102 (7) 4,094

7 unchanged sentences

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