P&G Beats Earnings Targets but Sales Growth Stalls Amid Weak Demand

Procter & Gamble released its fiscal year 2025 results on Wednesday, showing earnings per share that beat Wall Street expectations while full-year sales stayed flat at $84.3 billion. The company, based in Cincinnati, Ohio, faced headwinds from weak consumer demand, unfavorable currency shifts, and unchanged product volumes, leading to a dip in its stock price during premarket trading.

Background

Procter & Gamble makes everyday products like Tide detergent, Pampers diapers, Gillette razors, and Crest toothpaste. These items sit on shelves in stores around the world and fill homes from the U.S. to Europe and Asia. The company tracks its year from July 1 to June 30. For fiscal 2025, which ended June 30, P&G dealt with a tough economy. Shoppers cut back on spending as prices for food and other basics stayed high. Geopolitical tensions added uncertainty, and currency values shifted against the dollar in many markets.

Over the past year, P&G raised prices on some products to cover rising costs for raw materials like oils and chemicals. This helped profits but slowed sales volumes as buyers bought less or switched to cheaper options. The company runs 10 main product groups, from baby care to skin products. Nine of them saw some sales growth when adjusted for currency and deal impacts, but overall demand felt soft.

In the prior year, fiscal 2024, P&G posted net sales of $84.0 billion. That set a baseline. Analysts watched closely to see if the company could keep growing amid these pressures. P&G has a history of steady results, with nine straight years of earnings growth per share on an adjusted basis.

Key Details

For the full fiscal year 2025, net sales came in at $84.3 billion, the same as last year on a reported basis. Pricing added one percentage point to growth, but foreign exchange rates took away one point. Product volumes held steady, neither up nor down. When stripped of currency swings and one-time deals, organic sales rose two percent. Earnings per share on a diluted basis hit $6.51, up eight percent from $6.02. On a core basis, excluding one-offs, it reached $6.83, up four percent. Currency-neutral core earnings per share also grew four percent.

The fourth quarter, covering April to June, showed net sales of $20.9 billion, up two percent from $20.5 billion. Organic sales matched that two percent gain. Pricing and product mix each added one point, while volumes and currencies had no net effect. Diluted earnings per share jumped 17 percent to $1.48 from $1.27, helped by lower one-time costs compared to last year. Core earnings per share rose six percent to $1.40.

Costs told part of the story. Cost of products sold rose to $41.2 billion from $40.8 billion for the year. Gross profit edged down slightly to $43.1 billion. Selling, general, and administrative expenses dropped three percent to $22.7 billion, aiding the bottom line. Operating cash flow stayed strong, supporting returns to shareholders through dividends and buybacks.

Segment Performance

Results varied by product line. Family Care, which includes Bounty paper towels and Charmin toilet paper, grew mid-single digits in organic sales. Personal Health Care, with Vicks and Metamucil, also rose mid-single digits. Fabric and Home Care, like Tide and Mr. Clean, saw low-single-digit gains. The same held for Feminine Care, Hair Care, Grooming, Oral Care, and Skin & Personal Care. Baby Care dipped low single digits, hit by softer demand for disposables.

Geographically, growth spread across regions. Greater China and Europe posted solid organic sales increases. Enterprise markets, including parts of Africa and the Middle East, faced challenges from local issues like operations wind-downs in places such as Nigeria.

"We grew sales and profit in fiscal 2025 and returned high levels of cash to shareowners in a dynamic, difficult and volatile environment," said Jon Moeller, Chairman, President, and Chief Executive Officer.

Gross profit margin for the fourth quarter stood at 49.1 percent, steady amid cost pressures. Adjusted free cash flow productivity reached 87 percent of net sales, showing good cash generation.

What This Means

The mixed results point to a split picture for P&G. Strong cost controls and pricing power lifted profits, but flat volumes signal shoppers pulling back. Weaker demand hit everyday items hardest, as families prioritized essentials over upgrades. Currency losses, especially in emerging markets, masked underlying strength.

For investors, the earnings beat offered some relief, but revenue shortfalls weighed on sentiment. Shares fell in premarket trading after the report, reflecting worries over demand trends. P&G returned cash through its ongoing dividend, now at 69 years straight, and share repurchases.

Looking ahead to fiscal 2026, P&G expects organic sales growth in the mid-single digits, though below prior guidance due to softer market outlooks. Core earnings per share should rise in low-single digits on a currency-neutral basis. The company plans to keep focus on a tight product lineup, better performance in packaging and marketing, and cost savings to fund growth.

Product launches continue, like new Tide formulas and Gillette innovations. Supply chain tweaks aim to cut costs further. In markets like the U.S., where volumes dipped, P&G pushes value packs and promotions. Abroad, it navigates tariffs and trade shifts.

Broader consumer goods peers face similar issues. Rivals like Unilever and Colgate report soft volumes too. This suggests a wider slowdown in household spending. If inflation eases and wages rise, demand could rebound. For now, P&G stays lean, targeting balanced growth across its global reach.

The company employs over 100,000 people worldwide. Its results affect suppliers from farms to factories. Stable finances let it invest in sustainable packaging and digital sales channels, adapting to online shopping growth.